From Consumersunion.org:
What is Credit Monitoring?
Consumer credit reporting agencies offer to "monitor" your credit for a fee. Credit monitoring services can be costly. These services cost anywhere between $43.80 per year to nearly $150.00 per year depending upon the provider. Typically, these services say they will notify you if anything unusual or suspicious appears on your consumer credit report.
How to Monitor Your Own Credit
You can monitor your own credit and make sure that your record represents you fairly and accurately by ordering and regularly reviewing your consumer credit reports from the three major reporting agencies. You can request a report from each of the three consumer credit reporting bureaus at the same time. The advantage of reviewing the three reports at once is that you can get a complete picture of your consumer credit report history that could be reported to others. However, if you want to monitor the accuracy of your consumer credit reports throughout the year, request your report from one bureau initially, then follow up with another bureau's report four months later and the third four months after that. This is an effective way to monitor your credit at no cost.
If you find errors, no matter how small, be sure you get them fixed, and make sure that you contact all three bureaus with your change. You should receive amended reports within a week after the changes take effect.
Be sure you close long unused accounts that are listed as still active on your consumer credit report. An unused account is an opportunity for an identity thief. If you close an account ask that it be listed as "closed at the request of the consumer."
And most importantly:
Why it’s a Rip off
Credit reporting companies have found a gem in "credit monitoring". They have your credit data and sell it to just about anyone and everyone that comes along. But there's a problem. ID Theft is rampant and people are getting tired of it.
Enter "credit monitoring." The nice, consumer friendly credit companies are helping to solve the problem! See? We'll monitor your file and let you know as soon as something looks suspicious. All for a low fee.
There are a few problems with this.
- It doesn't stop ID theft, it just let's you know that it's happening faster than you would otherwise.
- It's worse than insurance - At least with Insurance, you can control your level of risk. For example, if you don't drive much, your risk of an accident is much lower than someone who delivers pizzas. But you have no way to know if you are at more or less risk for ID theft. So you'll pay and pay and might never see any benefit from the money lost.
- There's a free alternative available - With the new law requiring the credit companies give you one free credit report per year, if you stagger them to get one every three months, you will be able to constantly see your credit report anyway. While this is not as good as monitoring would be, it's better than paying $150 or more per year for the "service".
- It's a type of fear-based sale - The credit companies are the reason the problem exists in the first place, but they will let you pay them "protection money" to stop it.
- Credit monitoring is big money - Did you ever wonder why there are SO many outlets for credit monitoring? Here's a hint: why were there so many outlets for home-equity loans? Because people are making money hand over fist on it. Any time you see some financial service that seems to have a million knockoffs seemingly overnight, (e.g. payday loans), you can bet that something is wrong.
- They charge way too much for the service - So you get an e-mail any time your credit file changes. There's almost no cost associated with this!
- It's not necessary if you live in a state that allows credit freezes - There is nothing, that credit monitoring buys you if you have a credit freeze on your account (as long as your personal password hasn't been compromised). That's because without your personal password that you use to thaw your account, no one can get access to your credit file.
