Is Credit Monitoring Worth It?

·5 min read

Hackers prey on personal financial data for access to your credit cards or details such as your name, birthdate and Social Security number to take out loans in your name. You can't do much to stop a data breach -- an incident that exposes your confidential information -- but you can protect yourself from the effects of a breach, such as identity theft and fraudulent credit card activity.

Using credit monitoring or identity theft protection services can help safeguard your information from criminals and keep your financial data clean, allowing you to apply for credit cards and loans. But the two services are different, and experts say you'll need to understand their limitations to know whether they could be right for you.

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Credit Monitoring vs. Identity Theft Protection Services

Credit monitoring services alert you to changes on your credit report, like a new credit account. Identity theft services, on the other hand, more closely track your personally identifiable information in apps, websites and other places for unusual activity that could indicate identity theft.

The term personally identifiable information, or PII, refers to data that can be used to trace someone's identity. Full name, Social Security number and email address are examples of PII.

Identity theft protection services might also monitor:

-- Public information record changes

-- Address changes

-- Court and arrest records

Some companies offer both credit monitoring and identity theft services, while others provide just one or the other.

Where Can You Get Credit Monitoring and Identity Theft Services?

Leading players in credit monitoring and identity theft protection services include:

-- IdentityForce

-- Identity Guard

-- PrivacyGuard

-- LifeLock

-- IdentityIQ

-- Zander

-- ID Watchdog

-- IDShield

-- Experian

These services charge fees of about $20 to $30 monthly. Other services from banks and credit card issuers are available for free but may be more limited.

A free service, for example, probably won't pull information from all three of your credit reports compiled by the major credit bureaus.

The bureaus -- Equifax, Experian and TransUnion -- offer free or paid credit monitoring and identity theft protection services. These include programs such as Experian CreditWorks, Equifax Complete and TransUnion TrueIdentity.

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Should You Pay for Credit Monitoring or Identity Theft Protection Services?

Paying for credit monitoring or identity theft protection service can make sense in certain circumstances, says Susan Grant, director of consumer protection and privacy at the nonprofit advocacy group Consumer Federation of America.

If you don't have the time to monitor your credit reports or you've been a victim of identity theft, paid services can be helpful.

"These services can do things on your behalf that would otherwise take a considerable amount of time," says Eva Velasquez, president and CEO of the Identity Theft Resource Center, a nonprofit that helps identity theft victims. She cites the example of scraping public databases.

At the same time, these services have limitations, and most consumers do not need the extra protection, Grant says. "As scary as identity theft is and as upsetting as it is, most of the problems can be easily detected by consumers themselves or by their own creditors," she says.

That said, if you decide to pay for monitoring, shop around to make sure you find the right service. Before signing up, you'll want to find out the answers to these questions:

-- How extensive is the credit monitoring? Does the service monitor reports from all three of the major credit bureaus? Does it monitor other smaller credit reporting agencies? Does it look at public records? A more complete service can offer more value, but the extent of monitoring necessary depends on your comfort level.

-- Do you also need identity theft insurance, and what does it cover? Most major identity theft protection services provide this insurance, but it generally doesn't reimburse you for financial losses from the theft. Because you may already be covered under your homeowners or renters insurance policy, ask to see terms, conditions and exclusions of coverage.

-- Will the service help you recover from a data breach? Even if the company promises comprehensive assistance, drill down on the details, Grant says. "They may contact creditors and others for you, but do they actually follow through and make sure that your problem is resolved?" she asks.

How Much Does Credit Monitoring or Identity Theft Protection Help?

Credit monitoring and identity protection services are the most helpful for people who are concerned that their accounts might be breached in the future, Grant says.

"They can help you detect certain kinds of fraudulent use of your personal information more quickly than you might otherwise," she says.

Most of these services cannot help you resolve problems that have resulted from identity theft, Grant says. She likens buying credit monitoring or identity theft protection to purchasing automobile or homeowners insurance to guard against losses.

"You buy insurance in case something happens to you," Grant says. "You can't have something happen to you and then buy insurance for it."

Some services will help you resolve identity theft cases, but they tend to be costly, she says.

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Can You Monitor Your Own Credit?

Instead of paying for a service to monitor your credit, you might opt to do it yourself for free.

"There are many circumstances in which you can just look at your credit report yourself to spot any inaccuracies or fraudulent activity," Grant says.

In fact, the three major credit bureaus are offering free weekly access to your credit reports through April 2021 at If you discover a problem on your credit report, you will need to contact each credit bureau separately to correct it.

You might also be able to get free credit monitoring support. Check with your credit card issuer, employer or home insurance company for access to free or low-cost monitoring. Even your Costco or AARP membership may come with it.

If you're the victim of a data breach, you could receive free credit monitoring or identity theft protection services.

If you'd like to take preventive action, freezing your credit is another option. A c redit freeze is a free tool that restricts access to your credit report and essentially makes opening an account impossible unless you "thaw" the freeze.

Regardless of whether you pay for monitoring or do it yourself, you can only minimize your risk. "Nobody can guarantee you that you will not be a victim of identity theft," Grant says.