Do You Really Need to Pay for Credit Monitoring?

by Miranda Marquit · 11 comments

Identity fraud is one of those scary situations that we hear about a lot. And for good reason. Even though, according to Javelin Strategy & Research, identity fraud fell in 2010, it rose again in 2011. Scary statistics about how fast identity theft is growing as a crime may lead you to decide that credit monitoring is right for you.

But do you really need to pay for credit monitoring services?

If you are willing to take a little time and effort, the answer is probably no.

You Can Monitor Your Own Credit

You can monitor your own credit for free, or for a fairly low cost. First of all, you need to set up a schedule to get access to your credit report regularly. You are entitled to a free report from each of the three major credit bureaus each year. You can set matters up so that you receive a free credit report every four months, planning when you get your free credit report so that you can check on a regular basis.

When you find fraudulent items on your credit report, you can dispute the items, and take other steps to lock down your credit file. Checking your credit report regularly can be a good way to stay on top of things. However, if you go the free route with your credit report, be aware that sometimes all of the information on one report isn’t on another. While checking report every few months can be effective, it isn’t 100% full-proof.

It’s also possible to monitor your credit situation by paying attention to your bank account statements. Many people don’t closely check their credit card and bank account statements, and that’s a mistake. You can catch fraudulent charges by looking over your statement each month. Track your spending (use personal finance software to make this easier) so that you know where your money is going each month. Then, compare your records with your credit card and bank statements. If something is off, it might be an indication that a fraudulent charge has been made. Investigate the matter further to find out if you really are a victim of identity theft.

These measures are all free. If you want to check your credit report a little more often, it’s worth noting that most of the time you can get a 3-in-1 report from one of the bureaus for a reasonable cost. It’s also possible to pay for individual reports for a relatively inexpensive amount. Check each credit report twice a year (again, space out when you check your reports), and you’ll get one report from each bureau for free, and pay a small fee for the other.

The Convenience of Credit Monitoring

The main advantage to paid credit monitoring is the convenience. You pay a monthly fee, and everything is taken care of. Your reports are checked, and sometimes even other public records are checked for signs of ID fraud. You can have reports emailed to you each month, or every time something changes. That way, you don’t have to take the time to look for it.

Decide how much time you would spend to monitor your credit, and compare the costs of a la carte monitoring on your own with a credit monitoring service. Then, decide if it is worth it to you to pay someone else to take care of it.

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{ 11 comments… read them below or add one }

Special_Ed August 21, 2012 at 6:14 am

I signed up for a free CreditKarma.com account. I received an email notification when I applied for a car loan a few weeks ago. This seemed to work very well.

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Lance@MoneyLife&More August 21, 2012 at 9:11 am

I generally just stick with my 3 free annual reports and space them out 4 months apart. That has worked well so far for me.

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Christopher Nitkin August 21, 2012 at 9:20 am

I also love CreditKarma … in light of all the digital security breaches these days, I’ve started using LastPass and found a free credit monitoring feature there (http://lastpass.com/creditmonitoring.php). Has anyone used this? I’m inclined to trust the company since their flagship product is so well thought out and transparent.

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Harry @ PF Pro August 21, 2012 at 12:40 pm

I do the same thing as Lance in addition to the free credit monitoring services from credit karma and AAA(if you’re a member).

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Friday Friday August 22, 2012 at 9:21 am

I use a similar service here in the UK called Experian. It’s very informative and great for keeping an eye on my credit score.

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Marbella August 23, 2012 at 3:13 am

Most banks has credit monitoring services which you can pay extra for and it includes insurance in case something happens with your accounts.

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gz August 23, 2012 at 7:49 am

I paid for a service to monitor my credit scores while I was going through a HAMP loan modification with BoA. Before initiating the process I sent BoA a letter indicating that if I accepted the terms of their loan modification, the reduced payment or changes to my loan would not affect how they reported my credit score. I’m not sure if that was necessary but I did notice that BoA stopped reporting the status of my loan for two years.

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Bert August 23, 2012 at 7:56 am

Beware of who you sign up with. I went with my Bank of America Privacy Assist, and they steered me wrong while I was recovering from an already stolen ID. Although they did refund over a year of my monthly payments after I discovered this, the damage it did to my recovery can not be measured. I continue to pay after years of agony. I too have found Credit Karma, and wish I could turn back the clock.

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Matt August 23, 2012 at 10:01 am

Credit monitoring is only hindsight. By the time you or the credit monitoring service catch something it’s way too late to stop it. In a matter of hours your credit can be train-wrecked.

The only way to safeguard your credit is to lock your reports. $5 per report and it’s locked for life unless you lift the freeze (temporarily) for a credit check you authorize. All 3 of the credit services are required by law (in most states) to offer this freeze to the individual. It prevent’s ANY access to your credit history unless you give the OK. (Each temp lift costs $5 and you are required to keep track of a PIN)

This is definitely the DIY method and the credit report people make it more difficult than it has to be (the want your monthly $ for the monitoring service), but it is the ONLY way to stop ID theft before it happens.

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Alex October 9, 2013 at 10:48 am

There are a lot of things that I can do for myself, but some things are best left to the professionals. I can clean my own pool and change the oil in my truck, but I pay for the convenience of a professional, with the understanding that they are probably better at the whole credit monitor thing than I am. I also want to make it crystal clear that your chances of financial disaster are so much left if the theft is caught early. I promise you that if you don’t catch it early and it goes on for months, than your credit will be train-wrecked. Hey, credit monitoring isn’t for everyone. Try credit monitoring on your own and let us know how that works out for you. If you are interested in more information, go here http://scoredriven.com/products/creditwatch

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