Credit Monitoring Programs

The Federal Trade Commission (FTC) warns that identity theft is a devastating crime, both financially and emotionally. Victims are often turned down for credit cards, loans and other financial transactions and job opportunities while they try to fix the damage. Many turn to services like credit monitoring programs to protect themselves without realizing that such services help in certain ways but do not stop theft.

Definition

Credit monitoring programs track a person's credit records on a regular schedule, such as monthly or bimonthly, according to the FTC. They send alerts when there is activity like a creditor inquiry or a new account opening. This alerts subscribers to the service of potential identity theft if they are notified about an account they did not authorize. Some programs also guarantee their service and help customers resolve issues if identity theft occurs, and some remove their subscribers from prescreened credit card offers and similar mailings.

Cost

Consumer Reports states that credit monitoring services have a monthly cost or annual fee that adds up to anywhere from $60 to $180 per year. Credit bureaus often enroll customers in an automatic billing program that continues monitoring indefinitely unless the person cancels. The FTC explains that more expensive services generally monitor reports more frequently and have added benefits, like helping repair identity theft damage.

Benefits

Many consumers do not realize they are identity-theft victims until bill collectors call or they get turned down for new accounts even though they believe their credit score is high, the FTC warns. Credit monitoring does not keep a thief from stealing personal information, but it alerts the victim of suspicious activity. Catching problems like unauthorized accounts early minimizes the damage because they can be immediately closed and fraud alerts can be quickly placed on credit reports to halt further activity.

Drawbacks

Some credit monitoring programs only watch reports from one credit bureau. TransUnion, Equifax and Experian may have different information in their records, so fraud signals could go undetected. Some do not provide good service, so the FTC recommends checking with the Better Business Bureau and local attorney general's office for complaints before signing up with any credit monitoring firm.

Alternatives

The FTC recommends self-credit monitoring as an alternative to paid programs. Everyone is allowed to get one free credit report from each bureau every year via annualcreditreport.com. The Privacy Rights Clearinghouse explains that monitoring is maximized by ordering a report from one bureau every four months. Consumers who want to check their records more frequently can purchase additional reports.

Credit freezes stop identity theft by halting credit report access unless the application provides a password. The FTC explains that each bureau does its own separate freeze.