Credit monitoring services keep an eye on your credit profile, including your credit report and score, and can alert you to changes or potential fraud. Think of credit monitoring as an early warning system that could prevent further damage.
Many credit monitoring companies charge monthly fees that can be upward of $30.
However, you can do most credit monitoring services on your own for free. There are a few instances, however, where the service might be worth the cost, such as if you’ve already been the victim of identity theft.
Here’s an overview of credit monitoring services, how you can monitor your credit on your own and when it makes sense to buy a credit monitoring service.
How to be your own credit monitor
Credit monitoring is a job you can do yourself if you’re willing to take the time. Here’s how:
- Get a credit freeze, which experts consider the strongest protection from criminals accessing your credit without permission.
- Sign up for a service from a personal finance website or your credit card company that offers free credit scores. Look for one, such as NerdWallet, that also offers free credit report information so you can watch for fluctuations in your score and report.
- Check the detailed information on your credit reports. Federal law requires each of the three major credit reporting agencies — Equifax, Experian and TransUnion — to give you a free credit report every 12 months, and more often in some cases. You must dispute any errors you find.
What credit monitoring can’t do
Credit monitoring services often market themselves as safeguards of your credit profile. But that’s not quite the case.
Here’s what credit monitoring companies can’t do:
- They can’t prevent identity theft or credit card fraud
- They can’t keep you from receiving phishing emails — or from opening them
- They can’t keep someone from applying for credit in your name
- They won’t correct errors on your credit report
- They won’t stop taxpayer identity theft
If you decide to pay for credit monitoring
Maybe you know you won’t follow through on do-it-yourself monitoring or are willing to pay for extra protection. If so, look for an identity theft protection product that offers both credit monitoring and a full suite of theft alerts.
The cost makes sense if:
- You’re already the victim of identity theft or at high risk of it, for instance, if your Social Security number already has been disclosed in a data breach or you’ve lost your Social Security card
- You don’t want to freeze your credit reports
- You know that you won’t monitor or freeze your credit
Look for a service that covers all three credit bureaus, not just one — otherwise, you’d be paying for partial coverage.
NerdWallet recommends avoiding such offerings from credit bureaus. They may not offer much identity theft coverage and may have an arbitration clause limiting your rights if the bureau is the source of a data breach.
When credit monitoring is free
If you’ve been a victim of a data breach, you probably have been offered a year of free identity theft and credit monitoring.
Before you accept the free service, read the fine print. Understand when the free service ends and how to cancel it so you aren’t charged after that. Be wary of arbitration clauses that require you to waive your right to sue over the data breach.
Don’t let monitoring lull you into complacency, though, thinking that you can be less vigilant because someone else is watching your credit.
For example, the free service you’re offered might include monitoring from just one of the three major agencies and only for one year. Hackers can use your stolen information to apply for credit after the free service has expired or at businesses that check your credit at another bureau.