Do I Need Credit Monitoring?

The statistics are frightening: According to Harris Interactive, over a three-year period "49 million Americans were told that their personal information was lost, stolen, or improperly disclosed by government agencies, banks, or various other companies." Out of this amount, roughly 19% ended up having an identity theft or financial loss issue stemming from the breach. Credit monitoring is supposedly the best defense against this, but that may not be the case.

The Best New Technology, or Not?

For those looking for the most comprehensive credit protection, simple report monitoring probably won't do the job. By the time a thief has accessed your information and done something reportable, it may be a significant amount of time after the offense. A newer security measure called ID fraud protection "keeps an eye on other windows by trawling Internet chat rooms and directories and by sifting through online public records for signs of Social Security Number fraud, stolen credit-card account trafficking, and other types of ID theft," according to Consumer Reports Money Adviser. On top of that, these plans usually include credit report monitoring, giving more bang for the buck.

Is Your Social Security Number Too Available?

Because of the way incidents are reported on a credit report, it could be awhile before an item turns up under your particular Social Security Number. Consumer Reports says that a thief can take advantage of a "temporary fragmented file" that matches a number to a completely different person. It could be a significant amount of time before the information is melded together in an actionable manner. Credit monitoring didn't save one couple whom Consumer Reports cites in their write-up; The victims were members of credit monitoring services from all three major credit reporting agencies when they were victimized.

Companies are Secure Already

Smart Money writer Aleksandra Todorova writes, "Already, most lenders engage in...real-time monitoring of consumers' personal identity information by calculating identity scores that rate the likelihood that a specific credit transaction or application is fraudulent." This explains the inconvenient declines at the register that necessitate a call to the bank when you've spent more money than usual. Even though this fact seems in contrast to the large data breaches that occur yearly, the vast majority of questionable charges and purchases get stopped at the bank level. Credit monitoring might not serve to do much more to stop fraud than already-existing algorithms and fail-safes.

Privacy Issues

You don't want credit monitoring if privacy is a concern. Credit monitoring services archive every charge for analysis. This means that your information could later be used by people and organizations without prior consent or knowledge. Todorova notes the growth of information brokers who sell dossiers containing personal data, noting that "huge databases of consumers' personal information can be used by lenders, marketers or any other service provider willing to pay the 50 cents to $2 charge per transaction to have it scored for the likelihood of fraud."