How Useful is Credit Monitoring?

Millions of Americas have their identities stolen each year, according to Consumer Reports. As a result, many companies are marketing credit-monitoring services as a means of protection against unauthorized use of personal and financial information. However, some consumer advocates say such services don't go far enough to protect consumers' identities.

Monitoring Services

Credit-reporting agencies, banks and other companies offer credit-monitoring services for as much as $15 per month. The services usually include access to credit reports and credit scores along with notifications to account holders about significant changes to their credit files. For instance, customers will be notified if new credit-card or loan accounts are added to their files or if a creditor reports an account is delinquent or has been closed.

Protections

Credit-monitoring services have been criticized for not providing complete protection from identity theft to their customers. Consumer Reports evaluated 16 services and reported in 2007 that half of them monitored credit files at only one of the three major credit bureaus--Equifax, Experian and TransUnion. That's a problem because credit information may not be reported to all three bureaus, and customers need to know what's in their files at each agency. Consumer Reports also notes one monitoring service took as long as a week to report changes to credit files to customers, although most services alerted customers to changes daily or within a day.

Fraud Prevention Services

People seeking a monitoring service to help avoid identity theft may find more comprehensive coverage from an identity fraud prevention and detection service. An April 2010 CBS MoneyWatch report titled "New Law Stops Sneaky Credit Monitoring Services" notes fraud prevention services monitor criminal, medical and public records along with credit files, but they also cost about $215 per year. Identity Guard also monitors suspicious activity involving the use of people's Social Security numbers. Experian is offering identity theft protection services the agency claims includes daily scans of the Internet for unauthorized use of people's Social Security numbers, debit cards and credit cards.

Do-It-Yourself Protection

You can provide yourself with limited protection from identity theft by regularly reviewing your credit files. The U.S. Fair Credit Reporting Act requires each of the three major credit bureaus to provide consumers with a free credit report every 12 months upon request. You can request those free reports and examine them for suspicious activity, such as an account opened in your name without your consent. Your credit reports have a public records section, which includes information about bankruptcies, liens and accounts in collections. If that section isn't blank, ensure that the information in it is accurate. You also should regularly examine your credit-card statements and bank statements for unauthorized charges or withdrawals.