Credit Monitoring Sites: Are They Worth It?

We’ve all heard the ads claiming that identity theft is everywhere, and that credit monitoring sites are here to protect us from these threats. From the annoyingly catchy songs, such as Freecreditreport.com to the ever persistent pop-up ads online warning us of the danger of our identity, many of these ads appeal to the need to feel secure in our lives. These sites claim that through their credit monitoring services we not only will be able to check on fraudulent reports on our credit scores but also more quickly learn of and address threats to our identity, for a small fee of course. While feeling secure is important, are these credit monitoring sites really worth the monthly fee to the average person?

So what do you really get when you sign up for one of these credit monitoring services? Usually there are two major components. The first major component is that these services provide an indication of possible fraudulent activity. This basically means that you hand over your personal information to the company and they watch for actions in your name that can affect credit scores. This includes things such as hard credit checks, new bank accounts opened in your name, and new credit cards, among other things. If anything the company deems “out of the ordinary” comes up in your name they notify you immediately to make sure you know actions are going on. For many this really means peace of mind when it comes to their finances and credit, which to some can be worth a lot. Additionally, many of the services offer a “free” credit scores for those who sign up for their credit monitoring services. Freecreditscore.com is infamous for this ploy to get individuals signed up for their credit monitoring services. A credit score report provides you information on the factors, both good and bad, that affect your credit. Looking over credit reports allows you to find incidents that were inappropriately or incorrectly reported to credit rating agencies. This is usually the first step when it comes to an individual wishing to improve their credit scores – it is hard to improve something that you do not understand.

One of the most popular reasons individuals sign up for credit monitoring is because they have reason to believe their credit or identity is under a serious threat of being exposed to criminals. Whether it is losing your wallet, losing a phone or laptop, or even having your home or apartment broken into – many things can increase your risk of having your identity stolen. If something like this happens to you signing up for a credit monitoring site would be useful because it would allow you to see if individuals found enough of your information to open up new lines of credit under your name or use existing lines you already have. While this is good to know it does not stop this from affecting your credit relationship with lenders. If you have a strong reason to believe someone is going to use your information to abuse your credit then why not go a step further and prevent them from hurting your credit? Services such as TrustedID will freeze your credit for a small fee, usually $20 to $40. This prevents anyone from seeing your credit reports if someone is manipulating your credit through identity theft. TrustedID’s services even include a $1,000,000 warranty for further peace of mind.

Another reason an individual might be interested in credit monitoring is if they have a large upcoming expense they are planning on, such as purchasing a house or car. This is because an individual’s credit score can have a real significant effect on the amount of interest he or she pays over the course of the loan for such a large purchase. Therefore it is important for an individual preparing to make such a purchase to understand how other financial choices will affect their credit score, so that they are most prepared for what is coming their way financially.

While credit monitoring does not make sense for the average American over the course of an average year there are circumstances that may make such services more useful and valuable. Every individual’s situation is different, especially when it comes to their credit score and security of their identity. If you believe you have reason to subscribe to a credit monitoring service be sure to do your research. Make sure you identify ahead of time what you want to get out of credit monitoring because many of these companies will attempt to “upsell” you on unnecessary services and programs once you enroll.

Stephen Padgett

Stephen Padgett

Stephen Padgett is a current junior at the University of North Carolina at Chapel Hill. He is working toward a BA in Economics and Political Science and plans on graduating early in December of 2012. Although he does not know what he wants to do for his career, he is looking forward to an opportunity with Credit Suisse’s Operations Team this summer in Raleigh.

Financially Stephen grew up in a family that preached saving and living below your means. That, in part, translated to his interest in Economics, especially how economics can affect individuals’ financial lives. Through his financial markets class in the fall of 2011, he furthered this interest by analyzing macroeconomic events. Stephen believes that finance, personal finance in particular, is a subject severely left out when it comes to public schooling in this country, and it is a problem that has manifested itself and contributed to many of the problems seen today. He also believes that education is the key to improvement and hopes that through his writings he will be able help people learn about finance, macroeconomics, and how to be financially savvy for the future.

In his free time Stephen enjoys playing and watching sports, wakeboarding, sailing, and country music. At UNC he has participated in Strive for College, UNC Dance Marathon, and UNC Relay for Life.
Stephen Padgett

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