Benefit of Credit Monitoring

Credit monitoring automatically picks up changes in your credit reports and warns you about them, a service you pay with a monthly or annual subscription. This service is offered by Equifax, Experian and TransUnion, which are the three main credit bureaus, and various banks and independent companies. Monitoring helps protect your credit rating by keeping you aware of what is being reported in your credit bureau files.

Description

Credit monitoring covers one, two or all three of your credit reports, depending on the particular service you choose. Your monitoring company watches for activity on the reports and alerts you to potentially suspicious changes, like new application inquiries and newly opened credit cards or loans. Prices and coverage details vary, depending on the service details, but they can run as high as $50 per month, according to the Wall Street Journal. Banks sometimes offer plans that are cheaper than the credit bureaus.

Benefits

Monitoring does not directly protect you from identity theft, according to Consumers Union, because it does not keep your data out of wrong hands or stop thieves from using it. The service alerts you to problems so you can add fraud alerts to your credit bureau files, notify lenders that opened fraudulent accounts in your name and dispute resultant negative information on your credit reports. The alerts prevent further damage to your credit rating because lenders take more care in processing applications under your name and Social Security number.

Considerations

Credit monitoring offers an extra layer of protection for consumers whose identities were stolen in the past and people who do business with companies that suffer security breaches, the Wall Street Journal advises. Fraud alerts placed after identity theft or a database breach expire in 90 days, according to Leslie Hunt of the Bankrate financial site, unless you ask for an extension and provide a police report with the request. Thieves can open accounts in your name once your initial alerts are over.

Alternative

You have a free alternative to credit monitoring, although it only allows you to check your credit reports at four month to one year intervals. The website AnnualCreditReport.com is federally mandated to give you one free report from each credit bureau every 12 months, the Federal Trade Commission explains. You can split the orders any way you wish, as long as you do not order twice from the same bureau within one year. For example, you can order all three reports together or get one in January, another in May and the last one in September. Examine the reports for suspicious activity.