Should You Pay for A Credit Monitoring Service?

/ BY / Credit 101

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:

  1. 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.

  2. Some of these services can be deceptive. Many offer to provide you with your credit score or your credit report for free. But if you look at the fine print, you'll find that you are, in fact, agreeing to sign up for their monitoring services.
  3. 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 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.

  4. You can also monitor your credit by reviewing the charges on your credit card bill each week. It takes just a few minutes and will serve as an early warning of potential problems if you don't recognize a transaction.
  5. You don't really need the extras that a credit monitoring service offers. One of the most common is identity theft insurance, which can compensate you for any money you lost as a result of the identity theft. But the truth is that most people don't actually lose much money, since their credit card liability is very limited as long as they report a theft promptly.
  6. Some credit monitoring companies do offer help in straightening out problems with your credit reports in the event your identity is stolen. But since it's your credit score that's being threatened, you'll want to keep on top of the situation anyway. It may be more reassuring and more productive (although also more time consuming) to deal with these problems yourself.

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.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.