Should I Sign Up for Credit Monitoring?

Protecting personal financial information is a significant concern due to increasing data breaches and fraudulent activities. Understanding available tools to safeguard personal data is important for financial security.

Understanding Credit Monitoring Services

Credit monitoring services track activity on credit reports, issuing alerts for suspicious changes that may indicate fraud or identity theft. This allows for quick action if unauthorized access to credit files is suspected.

Alerts are typically triggered by events such as new credit applications (resulting in a “hard inquiry”), new accounts opened, significant changes to personal information like an address, or public record items such as bankruptcies or liens. These notifications are commonly delivered through email, text messages, or mobile application alerts, providing timely updates.

Distinguishing Related Services

A credit freeze, also known as a security freeze, restricts access to an individual’s credit report. This prevents credit bureaus from releasing the report to potential creditors, effectively blocking new credit accounts from being opened in that individual’s name.

Credit locks function similarly to freezes by limiting credit report access, but differ in ease of use and legal framework. Freezes are federally mandated and free to place and lift. Credit locks, often a feature of paid monitoring services, can be managed instantly via mobile apps. Both block new credit applications, but their implementation and legal protections vary.

Identity theft protection services offer broader security than credit monitoring. These comprehensive services typically include credit monitoring, dark web monitoring for compromised data, identity restoration assistance, and fraud protection extending beyond credit, such as tax or medical identity fraud.

Accessing Credit Monitoring and Related Tools

Many financial institutions, including banks and credit card companies, offer free credit monitoring services to their customers. Consumers may also receive complimentary monitoring after a data breach. Paid services are available from various companies, with individual plans up to $360 annually, and family plans between $300 and $500.

Federal law grants individuals a free copy of their credit report once every 12 months from each of the three major credit bureaus: Experian, Equifax, and TransUnion. These reports are accessed via AnnualCreditReport.com, the only authorized source. To implement a credit freeze, contact each bureau independently online, by phone, or via mail. Online and phone requests are generally processed within one business day.

Understanding What Credit Monitoring Addresses

Credit monitoring services detect and alert individuals to financial fraud impacting their credit reports. This includes unauthorized new credit applications (hard inquiries), new accounts opened without consent, and changes to personal information or public record entries like bankruptcies.

Credit monitoring has limitations regarding the types of fraud it detects. It does not alert for unauthorized charges on existing credit card accounts, as these typically do not appear on credit reports. The service also does not cover non-credit-related identity theft, such as medical identity theft, tax fraud, or online scams that do not directly affect credit files. While credit monitoring offers insights into credit-related activities, it is not a comprehensive defense against all financial fraud or identity misuse.