Credit Monitoring Services: Are They Worth the Cost?
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What is credit monitoring?
Credit monitoring services typically include alerts when a credit application has been made in your name, such as opening a new account or adding an authorized user, and when your credit score or credit report changes.
Other offerings from credit monitoring services may include alerts about large transactions, credit limit increases and changes to personal information such as your address.
The benefit of credit monitoring is that you learn right away if someone is trying to use your data, rather than months or years later, when there is more damage and undoing it is more complicated.
If your data has been compromised, you face a lifelong risk of identity theft. But there are steps you can take, including signing up for credit monitoring, that can add a layer of protection and peace of mind to your finances.
Are credit monitoring services worth it?
The value of a credit monitoring service depends on how much work you want to put in. You can do your own credit monitoring for free, and even prevent fraud risks by freezing your credit.
Free credit monitoring services
Here are things you can do to protect yourself:
Get a credit freeze, which blocks access to your credit reports. Experts consider this the strongest protection from criminals accessing your credit without permission. You can freeze (and unfreeze) your credit online or with a phone call to the three major credit reporting agencies: Equifax, Experian and TransUnion.
Check the detailed information on your credit reports. You can get free credit reports each week from the three major credit reporting agencies using Annualcreditreport.com. If something is wrong, you can dispute credit report errors.
Consider adding a fraud alert to your credit file. A fraud alert requires potential lenders to call you and verify your identity before a new line of credit is opened in your name. The basic alert is free and lasts for one year, but it can be renewed. An extended fraud alert lasts for seven years and is for identity theft victims who have filed reports with the Federal Trade Commission. It’s renewable, too, but only if paperwork is resubmitted after seven years. If you place a fraud alert at one of the three credit bureaus, the other two are notified and similar fraud alerts are placed on those accounts, too.
Look into free credit monitoring that your bank, employer or credit card issuer may offer. Or get your free credit report and monitoring with NerdWallet.
» Get your free credit report from NerdWallet
Paid credit monitoring services
Maybe you know you won’t follow through on do-it-yourself monitoring or are willing to pay for extra protection. If you’d feel better paying for credit monitoring, learn what to look for in their service offerings. Seek out services that offer three-bureau credit monitoring and a full suite of theft alerts.
These typically cost more than $200 per year for individual plans, while some family plans exceed $300. That expense may make sense if:
You’re already the victim of identity theft or at high risk of it — for instance, if your Social Security number already has been disclosed in a data breach or you’ve lost your Social Security card.
You don’t want to freeze your credit reports.
You know that you won’t monitor your credit.
Before signing up, review the services included, when and how you can cancel, and what your rights are if the service doesn't protect you. Look for a service that specifically promises "three-bureau credit monitoring" — if a service covers only one credit bureau, you’re paying for partial protection.
» We compared them: best identity theft protection services right now
Avoid credit bureau products
If you are buying credit monitoring, avoid the offerings from credit bureaus themselves. Here's why:
These may not offer much identity theft coverage, despite costing as much as other companies' offerings.
Credit bureau monitoring plans typically have an arbitration clause in their terms of service. When you sign up, you must waive your right to a class-action lawsuit and agree to binding arbitration, which widely is considered to be against a consumer’s best interests.
Know the limits of credit monitoring services
Credit monitoring services often market themselves as safeguards of your credit profile. But that’s not quite the case.
Here’s what even the best credit monitoring companies can’t do:
They can’t prevent identity theft or credit card fraud.
They can’t keep you from receiving phishing emails — or from opening them.
They can’t keep someone from applying for credit in your name.
They won’t correct errors on your credit report.
They won’t stop taxpayer identity theft.
While credit monitoring is helpful, proactively blocking access to your credit reports by issuing a credit freeze with all three credit bureaus provides an extra layer of protection that is free and won't negatively impact your credit score.
Stay on top of your finances by pairing a credit freeze with a fraud alert and checking your credit reports regularly.
» Learn how to prevent identity theft
