What Is Credit Monitoring? Is It Worth The Cost?

Lyndon Seitz
Writer
Dolores Bernal
Editor
February 15, 2024

Here are Home Security Heroes, one of our most frequent recommendations is to invest in credit monitoring services. They have saved millions of people from identity theft and many more from severe consequences should a breach occur. They are simply a fantastic investment for the average family.

Yet what is a credit monitoring service? How do they work, what is their process, and are there any downsides or weaknesses to know? Is signing up for one all you need to do?

A better understanding of the services you are using or intend to use is always good. It helps you choose the right service and make the most of your time, money, and products.

Therefore, here’s what you need to know about credit monitoring services and how to best choose and use one.

Best Credit Monitoring Apps: Tested & Reviewed

A Basic Definition of Credit Monitoring

Hand drawn credit score concept

Image by Freepik

Credit monitoring is keeping track of one’s credit and changes to it. This means noticing potentially suspicious activity, getting regular credit score updates, and looking for signs of identity theft.

It is difficult or impossible to do this by yourself, so most people use credit monitoring services. 

These services specialize in keeping track of potential signs of problems or suspicious activity and will alert people to issues and provide regular reports. The goal is to alert you to problems as soon as possible so you can react to protect your accounts and information.

Some providers will provide additional services, but the fundamental service is keeping watch over credit reports.

And given how often our credit is used, legitimately and potentially illegitimately, it’s important to understand how it is used and our current standing among potential creditors. We need to know if there’s an issue immediately, as credit problems only worsen over time.

Why Does It Need to Exist?

Identity theft and fraud, for the most part. Given the digital age and the number of data breaches that have plagued us in the last few decades, criminals have easier access to our private information than ever.

No matter how hard we try to prevent it, the information often gets into the world. Therefore, the next line of defense – credit monitoring for suspicious activity – is necessary to prevent financial losses and major issues when applying for credit.

The FTC received 1.4 million reports of identity theft in the last year. Cybercrime losses totaled more than $10 billion. The median loss is about $500 for a victim.

And cybercrime, specifically identity theft, is on the rise, with a spike in the last five years.

You could be a victim of this trend, so credit monitoring services are probably right for your household.

How Does It Work?

A credit monitoring service will regularly review and monitor a person’s credit score and reports.

Most credit monitoring services will tell a user about significant changes in one’s credit history, such as applying for a loan or credit card. It checks out if the user has done this and knows about the change. If not, it’s a sign of suspicious activity.

A credit monitoring service might also check for patterns, locations, habits, etc., to see if something is off. If someone lives in Maine but supposedly applies for a car loan in California, that’s a red flag.

Other services will focus on one’s personal information and identity as a whole, knowing how often other information leaks can lead to identity theft. Some might look at social media accounts, and others at the dark web to see if information pops up. Every service does things a little differently.

However, they can only track information. Therefore, while it can be useful, a credit monitoring service is only one tool to be used, and it must be used. If reports are ignored, and people don’t pay attention to what the monitoring tells them, it is as if they don’t have the service, to begin with.

What Does It Track?

As mentioned in the last section, what gets tracked varies depending on the service used. However, some common things tracked are:

  • Any requests for credit or a credit check when applying for a new line of credit.
  • Any major changes to public records or your credit file, such as an address change, bankruptcy, or name changes on accounts/files.
  • Some better services, such as Aura, might monitor your social media accounts to detect hacking or suspicious behavior.
  • Some will review lists of dark web information to detect if your information has been leaked.
  • Some will provide device security and help ensure your devices remain safe from an information security point of view.
  • They may monitor bank accounts, and credit card accounts for suspicious behavior if given permission.

What Can It Protect You From?

What can credit monitoring look out for? What are these services trained to detect, and what do their systems look for when doing regular scans of your credit report, etc.?

1. Identity Theft

The main goal of these services is to protect you from identity theft. It monitors your accounts and information for that reason explicitly.

Take heed of its reports of potential identity theft and investigate properly. If you do this, in most cases, you’ll be able to cut off the criminal before any real damage is done, keeping your credit safe and saving you from a much bigger headache.

2. Fraud

Identity and credit theft is a form of fraud, and so it stands to reason that protecting your credit information will help protect you from fraud or, rather, alert you to it early when it is going on.

If you’re falling for a scam, unfortunately, the service won’t usually be able to pull you aside and say, “Hey, watch out for this one.” However, it will be able to detect suspicious activity that you might not otherwise notice after information theft from fraud has occurred, allowing you to shut it down.

Also, note that it will not protect you from all forms of fraud. No service can do that on its own, and it’s up to you to keep aware of the latest scams and how they operate (not as hard as you think). 

Read these Credit Scams:

Does It Invade Your Privacy?

One common concern about such services, and a legitimate one, is that it is another invasion of privacy in a world that already has enough.

In short, it can be an invasion of privacy, and the level of it can vary based on the service you use. Therefore, you should carefully consider what the services offered involve and whether you’re okay with that.

However, also consider that whatever data a credit monitoring service can access, other companies can already access. 

That information is already accessed whenever you apply for credit, and you’re likely ok with that. The difference is that, in this case, the checking is done for your benefit, and your data shouldn’t be sold or used if you’re using a good service.

Additionally, except for exceptional cases and cases where direct intervention is required to help solve identity theft, it will mostly be automated systems looking at your information, having no other agenda than looking for signs of suspicious behavior or identity theft.

What Credit Monitoring Can Do?

  1. It can warn you about credit applications made in your name (or anyone in your family, with some plans)
  2. It can monitor your credit reports and score regularly, warning you about potential problems so you don’t need to check them yourself regularly.
  3. It can tell you if there are attempts to change information related to your credit, such as an address.
  4. Some services can and will warn you about information available about you (social security number, contact info, etc.) on the dark web.
  5. Some services or plans will monitor the credit of family members as well, having family plans as an option.

What Credit Monitoring Can’t Do?

  1. It cannot prevent you from falling for a scam that seeks to take your money or personal information.
    • Similarly, it cannot block scams, phishing emails, and the like from reaching you in the first place. It’s up to you to delete and ignore them.

  2. It cannot fix an error on your credit report. You’ll need to call about that.

  3. It cannot keep your information safe from a data breach. That is simply outside of its control. If there is a data breach and it is known, a good credit monitoring service can warn you and stay vigilant but not do much else.

  4. It cannot help much in the case of taxpayer identity theft.

  5. It is not a complete defense against identity theft. Some services will help you resolve the issue as soon as possible and provide insurance to remove the financial burden of identity theft, but that doesn’t mean it cannot happen.
    • While credit monitoring can tell you if someone applies for credit using your identity, it cannot stop someone from doing so. Think of it as an alarm, not a lock.

What Credit Monitoring Services May Do?

  • Some of the top credit monitoring services offer identity theft insurance that will cover expenses related to identity theft and cover you while you are dealing with the situation.
  • Some may provide services that have them deal with much of the heavy lifting of identity theft recovery. They might not be able to do everything, but they can help.
  • Some services include additional tools such as a malware scanner or password manager. They are not the best in their class but they can be a nice perk.

Why You Should Still Check Your Credit on Your Own as Well?

A credit monitoring service can be extremely helpful in knowing if there is an issue or potential identity theft going on. However, only you know exactly what should or should not be on there. Therefore, you should check the information the service provides or your credit scores.

There’s also the matter of becoming more financially literate and understanding your current financial and credit situation. 

Are you applying for a mortgage or car loan? How does your credit score stack up against the average? You can then course correct or continue the course to improve your score. This can save you thousands or tens of thousands of dollars.

Free Versus Paid Resources

There are more credit monitoring services and resources than we can count. Some are freely provided, and others are paid. Others still are a side-service for another subscription or purchase you might make. 

Paid resources can differ from one another and vary widely in quality. Unfortunately, some can be scams or attempts at identity theft, so it is vital to use a reputable credit monitoring service. 

The same goes for free services, which we’ll talk about shortly.

In any case, I recommend using a paid service if you’re serious about protecting your credit, identity, and personal information.

How Much Do Paid Services Cost?

It can vary, but most are completely affordable for the average household. Typically, it ranges between $10-$30 monthly (though this may change over time). Note that the more expensive end of this range includes plans that cover a whole family.

You can often get a steep discount if you’re willing to pay annually instead of monthly.

You might also be able to snag a deal on such services. Sales and deals are extremely common, so don’t worry too much if you miss one. Just don’t wait for the “perfect” deal. Your identity and credit might be at risk while you don’t have protection.

The Potential Dangers of “Free” Services

While free services have clear advantages in that you don’t have to pay for them, they won’t offer as much as paid services. 

They’re unlikely to offer additional identity theft-related services and perks, monitor things outside of your credit yet directly related to your identity, and there might not be as many family options.

You will want to consider whether you are getting your services from a company that doesn’t have your protection as a priority. Were services provided to placate a court decision? Is it a benefit for a company that seeks to cut costs regularly? They probably aren’t contracting the best.

What to Look for in a Credit Monitoring Service?

Flat design credit assessment concept

Image by Freepik

You may want to avoid the services offered by the major credit score bureaus. They may not offer adequate protection, and there are often clauses that disallow you from a class action lawsuit if they make an error (and they can make errors, big ones). 

  • Price is always a consideration when buying a service, especially since you will pay monthly or yearly (recommended) in perpetuity. Make sure price isn’t your only consideration, though. You may be better off with nothing than a bad service that leaves you with a false sense of security.
  • The types of monitoring offered and how far they go. Some are better than others, and some offer premium services with one provider yet come standard with another. Consider what you need and where your security vulnerabilities may be. 
  • How safe they are with people’s personal information.
  • What extra perks, features, and services are offered? Is identity theft insurance part of the package? What about services such as security software or password managing software?

How Else You Can Protect Your Credit?

You should protect your credit and identity in more than one way. Identity thieves are (sometimes) clever, so you have to be cleverer. Consider the following to protect yourself and your family better.

  • Make sure your cybersecurity and information security setups on your devices are solid. You should install a decent security suite, use good passwords and two-factor authentication, and update programs and devices regularly.
  • Learn more about scams and types of fraud that lead to identity theft. Human error is the number one cause of data breaches on a business level. Don’t let it affect you on a personal level.
  • Be wary of which companies you give your information to. Some might be less secure than others.
  • If you are immediately wary or have reason to believe identity theft is imminent, you can freeze your credit as a precautionary measure. It can be an inconvenience, but it will stop identity thieves in their tracks.

Conclusion – Credit Monitoring Is Usually Worth the Cost

In today’s world, credit monitoring can be an indispensable tool to protect yourself from identity and credit theft. However, you need to know what you’re getting into and the potential benefits, if only so you can use these services to their fullest potential.

Among credit monitoring and identity theft prevention services, we recommend Aura to most users. However, don’t be afraid to explore your options to see what is best for your household. You know what you need best and what level of credit monitoring you will need.

A bit of preparation and research now will go a long way. Otherwise, don’t forget you can always switch providers if you don’t like what you get. Be safe and stay vigilant.

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