Credit Monitoring Services: Do You Need One?

Published January 7, 2013 by

Most financial experts agree that checking your credit report regularly is a smart idea. Monitoring your credit is an effective way to help prevent identity theft. If you want to improve your credit score and keep your personal data safe, you might be tempted to sign up for a credit monitoring service. According to the U.S. Federal Trade Commission, it normally takes up to one year for a victim of identity theft to notice the crime on their own. Credit monitoring services, however, can help you stop the crime before it gets out of control.

How Does a Credit Monitoring Service Work?

Over 10 million people in the United States felt victim to identity theft in 2011. Two-thirds of those who discovered the crime within five months incurred no out-of-pocket expenses. There are many companies that can monitor your credit history to detect any suspicious activity. Credit monitoring services can help detect identity theft and credit-related fraud. In addition, these services can help prevent errors from credit reporting agencies.

Whether you want to be alerted of fraudulent use of your personal information or you want to monitor your credit score and report, credit monitoring services can help. Companies that offer these services give you an easy way to review and track your credit online. Customers have access to advanced features such as the following:

  • Daily credit monitoring
  • Credit score estimators
  • Monthly access to online reports and scores
  • Experian score alerts
  • Email alert notifications when significant changes are made to your credit file
  • Surveillance alerts
  • Identity theft protection
  • Proof of collateral and assets
  • Unauthorized user updates

Credit monitoring services are paid services offered to consumers by credit reporting agencies such as TransUnion and Experian. When you sign up for a credit monitoring service, your credit report is constantly tracked. You will receive alerts about any changes in your credit file, such as new accounts, address changes, credit inquiries and negative information.

Are Credit Monitoring Services Effective?

Credit monitoring services have proven their efficiency over time. However, they have some limitations because they cannot fully cover all aspects of identity theft and credit card fraud. Many companies only monitor one credit bureau. Since most creditors only report to the major credit bureaus once per month or quarter, these agencies can only report the data received. This means that it can take up to 60 days to notice any changes to your credit file.

Also, these services usually don’t monitor check verification databases and check fraud. And even though they provide early warnings that a new account has been opened in your name, you will be responsible for solving this problem. The bottom line is that credit monitoring services can help reduce the risk of identity theft and credit card fraud but should not be your only means of identity theft risk management.

Although there are many credit monitoring companies, you should look for those that also offer credit protection services. When you sign up for credit monitoring, you can have the peace of mind that your credit report is being tracked for any changes or suspicious activity.