Will Not Prevent Identity Theft, Ineffective at Detecting It
When you listen to the credit bureau's sales pitch for credit monitoring, the key benefit is protection from identity theft. The truth is, a credit monitoring service will not prevent identity theft.
At best, it will alert you of it sometime after the crime has occurred.
In fact, before a credit monitoring service alerts of any credit-related activity (fraudulent or otherwise), all of these conditions must be met:
- The activity must be reported to a credit agency.
- The credit agency to which the activity is reported must be one that you are monitoring (some services only monitor one of three credit bureaus).
- Both the Social Security Number and the name used in the transaction must match your credit report. If the fraudster uses your Social Security Number and a different name, you will not be alerted.
With such a tough criteria to meet before you receive an alert, these services are hardly the vigilant watchdogs of your credit that the credit bureaus would have you believe.
What's more, not all identity theft is financial. Criminals will often assume someone else's identity to avoid prosecution, for example. Credit monitoring services will not protect from this and other forms of identity theft.
"Security Freeze" is a Better Choice to Prevent Identity Theft
Putting a security freeze on your credit reports is a cheaper and more effective way of preventing financial identity theft. With a security freeze, you "lock" your three credit reports with a secret code (a PIN). Then, the next time you apply for a line of credit, you temporarily unlock your credit report.
Security freezes (sometimes called credit freezes) are not available in all states yet. It is also more of a hassle when you do want to grant access to your credit report. But if you are truly worried about identity theft, you are much better off freezing your credit than signing up for credit monitoring.
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Expensive
You are already entitled to see your credit report free once a year from each agency. You can receive it for free if you are denied a line of credit, denied employment or are a victim of identity theft. You can buy your report for $10 - $15 anytime.
Why pay every month for something to which you have so much access?
Overkill
Historically, how often have you pulled your credit report? Once a month? Once a year? More than likely, you only look at your credit report before making a major decision, like when considering a car or home loan.
True, a credit monitoring service will alert you to changes on your report. However, by making efficient use of your free annual credit reports, you see changes in your credit every four months.
Deceptive Practices
Experian has been fined $1,000,000 dollars by the FTC as a result of a class action lawsuit. All three companies have registered Internet addresses similar to the official site for your free credit reports: http://www.annualcreditreport.com. Experian is notorious for "accidentally" failing to cancel the service when requested by the customer. There is so much to report here, we have dedicated an entire page to it!
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Over Hyping the Identity Theft Threat
The biggest selling point in the credit monitoring package is the daily or weekly alerts.
The way credit agencies make this relevant to you is to make identity theft seem like a certainty.
You don't need to spend hundreds of dollars a year to keep yourself safe from identity theft. A little education goes a long way.
Keep your Social Security number a tightly guarded secret. Check your credit reports for free when you have the opportunity. Read more tips in our free alternatives article. Practice these tips in your financial life and you wont have to live in fear or pay the credit cartel for protection.
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Paying Protection to Keep Your Good Name?
The credit bureaus make it their business to collect as much financial dirt on you as they can dig up. The information is often inaccurate. In cases of identity theft, some of the information may be fraudulent.
With few exceptions, you are not given the opportunity to review and dispute information on your credit report. Instead, the credit bureaus implicitly threaten to turn over this information to your business partners and employers unless you pay to see it.
Why this is not a crime is baffling. American citizens didn't ask for these databases on themselves. How many companies do we need to pay off to ensure no one is spreading falsehoods about you?
Peddlers of credit monitoring essentially claim their service is valuable because erroneous information frequently appears on your credit report. The more they make that claim, they more they prove Americans deserve free, unencumbered access to their credit reports.