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Is Credit Monitoring Worth the Cost? Let's Explore...

With the Experian breach of 2015 behind us and the Equifax 2017 breach settlement just finalized last month, most people are worried about protecting their private data but not sure how to go about it. Advertising for credit monitoring services are everywhere and you’re wondering if you should buy it or not. Here's our question:

Is purchasing credit monitoring services worthwhile?

Credit monitoring services track data that’s found in your credit report may indicate fraudulent activity. There are variations in what does get tracked but generally a purchased monitoring service includes:

  • New account activity
  • Credit score changes
  • Personal information changes like name and address
  • New inquiries or new delinquencies

Some services go beyond credit monitoring and into privacy protection where your online identity is monitored.

The purpose of credit monitoring is to mitigate the impact of credit fraud. I say mitigate, instead of prevent, because credit monitoring only detects questionable activity after it’s occurred. The service doesn’t predict something may happen, it can only report on suspicious activity that may indicate fraud. A credit monitoring service alerts clients when it detects questionable activity. You, the client, can then take corrective action if the activity is in fact, fraudulent.

At $10-$15 per month, is this worth the cost?

Well, maybe. However, there are other options such as doing your own monitoring or freezing your credit, both of which are free.

There are steps you can take to monitor your own credit: utilizing free credit reports, alerts from your bank and credit cards, and keeping track of your expenses.

  1. You are entitled to a free credit report each year from each of the three credit bureaus (Experian, Equifax, and TransUnion). If you request a report from a different credit bureau once a year and spread out the reports out over a few months, you’ll have a fresh report 3 times a year. Review your credit report for anything that doesn’t look right. This might be intimidating at first, but it will get easier once you understand how the reports are laid out. A careful review will determine if anything is amiss and if you need to take corrective action.
  2. Set alerts on all your credit and debit cards. Cards have different types of alerts, some will text at every purchase and some will only alert you if there’s suspicious activity. Check your card(s) fraud protection options to see what settings you can put in place.
  3. Check your account balances and transactions on a regular basis, maybe weekly or biweekly. You can dispute any changes you don’t recognize.

The most effective way to protect your credit is to freeze it. Freezing your credit restricts access to your credit report which prevents new accounts from being created with your identify. You can also temporarily unfreeze and refreeze you credit reports if you need to open a new account, rent an apartment or get insurance. As of 2018, freezing and unfreezing your credit is free to everyone. Follow these steps to freeze your credit:

  • Contact each of the credit bureaus and request that your credit report be frozen.
  • You’ll be given a pin from each company to use to unfreeze your credit.
  • That’s it. Your credit is frozen.

Need more detailed instructions?
Here’s a step-by-step guide for freezing your credit.

If you are looking to protect your credit, you can pay for the service or you can do it yourself, whichever best fits your needs and your budget.