3 Drawbacks of Having a Company Monitor Your Credit

A few years ago, it was enough to check your credit report annually. Now, many identity theft experts recommend that you review your reports at least twice a year, if not more often. The first hint you might have that you’re a victim is often a suspicious entry on your credit report. Should you spring for one of those credit monitoring services that promise to do the work for you? Maybe not. Read on.

Does Credit Monitoring Work? The consumer’s rising concern about identity theft has prompted the credit bureaus and other companies to see a lucrative marketing opportunity. The result is credit monitoring, or services that promise to watch over your credit report and alert you if anything suspicious occurs. Almost nonexistent 10 years ago, credit monitoring and similar “privacy- protection” services are now a $2.5-billion industry, according to the Center for Social & Legal Research.

What credit monitoring can’t do is prevent identity theft, despite marketers’ claims that it provides “protection” against such crimes. Credit monitoring services can’t snatch credit applications out of thieves’ hands or prevent lenders from opening accounts for the wrong people. What the better services can do is give you some early warning that there’s a problem, which can give you a head start in cleaning up the mess. The quality, however, varies widely, and most credit monitoring services have serious drawbacks:

1. They’re not comprehensive: The better services promise to check your report at all three credit bureaus, but typically they provide ongoing monitoring of your report at only one bureau, with only periodic checks of the other two. These periodic checks usually happen once every three months, but they might be annual. Some services stick solely to one bureau and never check in at the other two.

2. They might not provide much of a head start: The best services promise to alert you within 24 hours if someone applies for credit in your name. Others settle for weekly, monthly, or even quarterly updates. Again, because most don’t provide daily monitoring of all three bureaus, ID theft might not be detected for months.

3. They’re costly: The cheapest services cost more than $40 a year for a single bureau’s credit report that’s updated quarterly. The more comprehensive services cost more than $100 a year for daily monitoring of one bureau’s report, and quarterly updates of the others. To get ongoing monitoring of all three bureaus, you’d need to subscribe to several different services and pay more than $200 a year.

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