I now return to my series on credit history and credit scores. Monday, I covered the VantageScore. Today, I focus on credit monitoring. FICO, the three credit bureaus, banks, credit card companies, and many other independent services try to use scary warnings about identity theft to try to convince you monitoring is a necessity. So what exactly is credit monitoring and is it worth the cost?
What Is Credit Monitoring?
Monitoring services constantly check your records and send you daily reports concerning changes or alerts. Most services provide the following features:
- Unlimited access to all three credit reports
- Unlimited access to all three credit scores
- Daily alerts regarding changes to credit reports, credit scores, public records, and your address
- New account alerts
- New inquiry alerts
- Identity theft insurance (usually up to a maximum of $20,000)
Prices for the monitoring vary, but they usually run $12.95-$14.95 a month. Some offer discounts for prepaying a year in advance.
According to Consumer Reports, some services also check forums, chat rooms, and other websites where stolen credit information is sold. The article also states that credit monitoring won’t protect you if someone uses your social security number with a different name.
Who Needs Monitoring?
For most people, monitoring is a waste of money. You can get a copy of each your credit reports for free every year at AnnualCreditReport.com. If you mark your calendar to check one of the reports every four months, you can stay on top of your credit pretty easily. You won’t access to your credit scores, but that information isn’t necessary unless you’re preparing to take out a new loan or applying for new insurance.
A monitoring service may be a good idea if your identity has already been stolen and you’re in the process of documenting the extent of it and getting your credit cleaned up. If your information was stolen as part of a large data breach, the company holding your data may offer you free monitoring for a year. If so, accept it and use it for that year.
Should You Monitor Your Children’s Credit Reports?
You’ve probably heard recent ads touting monitoring services for children. The ads claim that your children’s identities could be destroyed if you don’t buy protection while they’re too young to apply for credit. It’s a nice theory, but in most cases, children’s identities are stolen by their parents, not by strangers. If you’re very concerned, request a free credit report annually. The credit bureaus won’t be able to provide a report in most cases because a social security number or savings account alone isn’t enough to create one.
In summary, credit monitoring is unnecessary for most people, including children. It’s only worthwhile if your identity has already been stolen and you’re in the process of stopping the breach and cleaning up your information.