The Federal Trade Commission estimates that as many as nine million American have their identities stolen each year. If you're one of that unfortunate group, the misuse of your personal information could have a serious impact on your credit rating, and it can take time and effort to get things straightened out.
So it's not too surprising that there are companies who offer to monitor your credit record and keep you informed of any potential problems. But is it worth paying anywhere from $10 to $25 a month to get this kind of service? And do these services really offer you the kind of protection that you think you're getting?
The answer to both questions is probably not. Most consumer finance experts advise against purchasing credit monitoring service for several reasons:
Although the services may make some vague promises to keep you safe from identity theft, there is in fact little that anyone (except you) can do to protect yourself from identity theft and its fallout. Most services monitor your credit record and notify you after the fact if there is a problem.
One advantage to using a credit monitoring service, however, is that it may find the evidence of identity theft sooner than you would on your own.
You can do your own credit monitoring at no cost. Federal law requires each of the three credit reporting bureaus -- Equifax, Experian and TransUnion -- to provide you with one free credit report each year. If you space these reports out -- requesting one every four months -- you'll be able to keep an eye on what's going on with your credit.
The easiest way to apply for your free credit reports is by going to AnnualCreditReport.com. The site will guide you through the process of requesting your report.
When you get your report, check to see if any banks or lenders have made inquiries into your credit history. If you haven't done anything that would warrant an inquiry -- applied for a loan or a new credit card, for example -- contact the company to ask about what's going on.
There may be one good reason to use a credit monitoring company, however, and that's your peace of mind. If the thought of identity theft is keeping you awake at night, or if you simply don't think you'll have the time or the discipline to do your own credit monitoring, you may want to purchase the service. Before you settle on any credit monitoring company, however, check it out with the Better Business Bureau and read reviews from people who have used its services.
The Federal Trade Commission has some suggestions about how you can look for signs of identity theft. Check out its website at the Federal Trade Commission's page on Detecting Identity Theft to learn more.