How Credit Monitoring Services Can Work for You

It is never fun to discover someone else is abusing your credit. Credit monitoring services send alerts to their customers when irregularities occur under their name or through their social security number.

Free credit reports, activity alerts, and asset insurance are just a few of the services offered by these companies. Alerts are issued when an account is opened in your name, large transactions are made, your credit score changes or credit limits are increased. These changes may refer to a suspicious activity or just be simple routine changes. Either way, you will be notified and kept informed of your financial health at all times.

Research shows that 16.7 million people fell victim to identity fraud in 2017. When it comes to identity theft, finding out sooner rather than later can be helpful in preventing more fraud from occurring. Having a system that alerts you instantly may save you time and money. It is worth noting that credit monitoring services do not prevent identity fraud. Instead, they keep customers aware of suspicious activity when it occurs.

A Plan for Everyone

There are many credit monitoring services operating on the market today. Within each company, there are typically different tiers of services available. Subscriptions can range from $10 to $30 a month, depending on the service you use. The higher the subscription cost, the more features that are available to you. For example, a cheaper plan may offer alerts on large transactions and changes to your credit score, while a more expensive plan will alert you of criminal activity carried out under your name.

The type of plan you choose should reflect your financial situation. You may not need a more expensive plan if your financial investments and online reach is small. However, if you have a lot of information that is vulnerable to identity theft, you may want to sign up for a more comprehensive plan. The variety of plans available allows customers to find the right coverage for them.  

Alerts for Suspicious Activity

When enrolled in a credit monitoring service, you will receive alerts when something irregular happens to your credit. Knowing this information as soon as it occurs will give you an advantage. Acting quickly to recover lost assets and lock your accounts will help reduce the damage caused by theft. In most cases, the following incidents will generate an alert from a credit monitoring company:

  • Changes to your personal information, such as home address.
  • Completed applications that involve your social security number.
  • Large payments made from an account.  
  • Criminal acts committed under your name.
  • Changes to your 401(K) account.
  • Activity on the dark web that pertains to your identity.
  • Breaches of security on large databases connected to you.

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Help Recovering Your Losses

Depending on the services available, you may be eligible to receive reimbursements for lost funds. Similar to the way insurance works, a customer pays a monthly premium and, if funds are stolen, the company replaces the money. Limits are applied to each account and are dependent on the plan that the customer is enrolled in.

In some cases, these reimbursements can reach one million dollars. This may be more than what a credit card company or other financial institution is willing to pay if funds were stolen from accounts held with them. In addition, some monitoring companies also cover lawyer and expert fees. Identity cases brought before the courts may be expensive. These services will help to cover your legal fees should a case need to be presented in court.

Free Credit Score Reports

Essentially, your credit score enables financial institutions to evaluate your ability to pay back a loan. While your report is personal, it is not always made available to you. Credit monitoring services offer free credit reports throughout the year. Having access to your report gives you a deeper understanding of your financial situation. Armed with the knowledge of your credit score, you can work hard to improve your numbers and know when to apply for a loan. Keep in mind that these perks are limited and subject to the plan you are enrolled in.

Free Credit Locks and Freezing

Freezing your credit is another tool included in monitoring services. Freezing your credit locks your credit report and stops anyone from accessing it. You will not be able to open an account or submit an application that requires one for the three credit agencies to view your report. While you will not be able to access the information yourself, neither will a thief. Therefore, a credit freeze may help keep your data safe from intruders. A credit lock is free to qualifying subscribers and should only be used if you are not planning to view your credit report in the near future.

The Cons of Credit Monitoring Services

While there are several benefits of subscribing to a credit monitoring service, there are a few situations where it might not be worth the fees. Some of the arguments against using these services include the following:

  • You can freeze your credit yourself. The three main credit unions, Equifax, Experian and TransUnion offer freezing services that may be cheaper than your subscription to a monitoring company.
  • You can get a free credit report every year through the government. Depending on the nature of your investments, once a year may be enough. In addition, spending money on two or three extra reports throughout the year may be harmful. Requesting what the industry calls “hard credit inquiries” may affect your overall credit score. Every time a lender pulls your report for a credit card or mortgage application, your score decreases by a few points. While this decrease is often temporary, too many hard inquiries in a short amount of time may result in rejected applications.
  • Your credit card company may already offer alerts. Most financial institutions already offer alerts for large purchases or purchases made outside the country. In most cases, they are free and part of your credit card contract. Paying a monitoring service to provide similar alerts would be superfluous.
  • It is hard to sue credit monitoring companies. Due to the arbitration fine-print in most of their contracts, customers are unable to file class-action lawsuits when a company has lost data or jeopardized their identity.

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