Credit Monitoring

With the ongoing threat of hackers and identity theft, many Americans turn to a credit monitoring service to keep tabs on their personal information. The service will keep an eye on your credit rating and notify you when there's any activity, giving you the chance to move early if someone has stolen important personal information.

What is Credit Monitoring?

Identity theft and fraud can strike suddenly and unexpectedly, with many victims totally unaware that someone is opening accounts and using their identity to apply for credit cards or make fraudulent purchases. Once your identity has been stolen, it can be a difficult and arduous task to rebuild your reputation with potential creditors, so the ability to be proactive in limiting the damage can be more than worthwhile.

Credit monitoring services will keep a careful eye on any and all activity surrounding your good name on any of the three major credit rating agencies: Equifax, Experian and TransUnion. Any activity surrounding your credit is conveyed to you, so if someone tries to open a credit card in your name, you’ll be notified of the associated credit check.

Even the best credit monitoring generally only informs you that your information has been stolen after the fact, but it can provide consumers with an important jump on preventing the fraudsters who have targeted them from wreaking too much havoc. If you can react quickly to close down your accounts, you may be able to significantly limit the damage that can be done.

Credit Monitoring Services

There is a wide variety of different types of credit monitoring services, so it’s worth carefully considering your options, particularly if you’re going to be paying for them.

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Free & Self-Credit Monitoring

Free Credit Monitoring

While most credit monitoring services charge between $15 and $30 a month, there are plenty of options that are free. Free credit monitoring generally offers fewer services, and in many cases it may be limited to one or two of the credit rating agencies, providing incomplete coverage. Still, you can’t argue with the price, and you may be able to cover Experian, Equifax and Transunion by combining more than one free credit monitoring service.

Self-Monitoring

In many cases, you may be able to perform the basic services of a credit monitoring service on your own. If you can be diligent enough, routine checks on your credit with each agency should allow you to spot any unusual activity on your own. If you know you can trust yourself to stay current, this might be a good option, but it’s worth noting that even a brief lapse can cause trouble and a professional service will usually offer much more comprehensive monitoring, which can go a long way towards securing your peace of mind, if nothing else.

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Credit Freeze or Fraud Alert

Another way to protect your credit from fraud is through a credit freeze or a fraud alert. A credit freeze simply puts the kibosh on anyone new being able to access your credit history. You can still access your rating, but new inquires are locked out, preventing fraudsters from opening new accounts in your name. A credit freeze, though, can be a drastic solution that will significantly inconvenience you and usually requires a fee (usually between $5 and $10) to freeze your credit and another fee if you need to temporarily unthaw it.

Another, less drastic option is a fraud alert. This won’t prevent someone from opening a new account in your name, but it does make the process longer and more difficult by adding extra layers of identity verification.

Identity Theft Protection

Identity theft protection is a form of monitoring that goes above and beyond what most basic credit monitoring services will offer. In addition to tracking activity with the three major rating agencies, identity monitoring will also inform you whenever your information shows up in a number of other places, like change of address requests, court or arrest records, payday loan applications, social media and websites on the dark web that are known to trade in stolen information. It’s a much more comprehensive form of protection against identity theft than normal credit monitoring, but once again, it only informs you when there is suspicious activity rather than preventing someone from stealing your information in the first place.

Insured Credit Monitoring

Some credit monitoring services are paired with identity theft insurance, which will usually help cover the costs associated with reclaiming your identity. Most don’t cover┬ástolen money or financial losses, but it will help you put your life back in order and soften the blow of identity theft.

Again, even with an associated insurance plan, credit monitoring services are reactive, allowing you to make it easier to deal with fraud but not actively preventing it. Even with robust credit monitoring, taking caution with access to your personal information remains important.

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About the Author

Joel Anderson is a business writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and most broad financial topics with an eye toward instructional writing for the investing outsider.

Joel Anderson holds shares in Walmart, Verizon, AT&T, the Guggenheim Solar ETF, the United States Oil ETF and the Vanguard Total Stock Market Index Fund.