Credit Monitoring Services: The Breakdown

Credit Monitoring Services: The Breakdown

Hardly a day goes by without someone becoming a victim of identity theft or another data breach happens. According to Javelin Strategy & Research’s 2019 Identity Fraud Study, $14.4 billion was stolen from U.S. individuals in 2018 from them. We've also documented more than 11.5 billion records breached in the U.S. since 2005. In such a world, you may find yourself researching credit monitoring services.

Protections

Credit monitoring services can protect you from new account fraud (someone uses your personal information to open credit card, mobile phone or other financial accounts using your name, Social Security number and other personal information) by notifying you if a new creditor looks at your credit report.

New account fraud can be difficult to detect. Since these billing statements generally aren't sent to your real address, it can take some time before you become aware of the account. In fact, you might not learn that you're a victim until you apply for new credit and are rejected (low credit score due to someone else opening accounts in your name) or are contacted by a debt collector for a past-due balance you don't recognize.

Limitations

While credit monitoring services can help you find out about fake accounts before you start getting collection letters, they don’t actually stop someone from opening new accounts in your name.

Some credit monitoring services can also provide you with a false sense of security because of holes in coverage. A service might only monitor one credit bureau instead of all three (Equifax, Experian and TransUnion).

Free vs Paid

You might already have access to free services that help to monitor your credit. Some banks, credit unions, auto clubs and other organizations offer free monitoring services with their credit cards or other services. These free services will often only monitor one of the credit bureaus.

If you're an active duty military member, you can get free credit monitoring from each of the three credit bureaus.

Victims of data breaches are frequently offered a year or more of free credit monitoring. In this case, it’s important to

  • check to see whether all three credit bureaus are included in the monitoring 
  • automatically receive alerts when there is any activity in your credit report

You also have the option to place a security freeze on your credit, which can prevent new account fraud.

Paid credit monitoring services can provide some additional benefits such as

  • unlimited access to your credit reports and scores
  • counseling services
  • identity theft insurance
  • additional monitoring (i.e. dark web)

If you decide to subscribe to a paid monitoring service, be sure you fully understand what it is and check to see if it follows Consumer Federation of America’s Best Practices for Identity Theft Services.