Can credit report monitor services prevent identity theft?

Identity theft is a widely reported problem that justifiably concerns many Americans. We work hard to establish good credit so that we can buy homes or cars or take vacations in the ways that suit us. Any time we wish to make a large purchase, the lender will check to see if we have earned the right to borrow the money by checking our credit reports. Unfortunately, criminals know the importance or such information and identity theft has become a large problem. By pretending to be you, criminals can spend money like there’s no tomorrow, buying new cars or televisions or stereos and leaving you with the bill. 

You will eventually find out that someone has been spending money in your name, but it often takes months or even years to resolve the problem. In many cases, these unauthorized activities will remain on your credit report for seven years.

The major credit bureaus, along with some other companies, have begun to offer credit monitoring services that, they claim, will help you avoid being a victim of identity theft. What do these services do? Are they worth the money? Should you invest in one?

Do they help? Yes and no. The services do tend to monitor activity on your credit report and they will notify you of any unusual activity, usually by e-mail. There are several problems with these services, however:

Most of them offer to monitor activity through only one credit bureau. This is typical of the services offered by the credit bureaus themselves. Ideally, the service would monitor activity through each of the three main bureaus, which are often not too good about sharing information with one another.

The alerts are often late. If someone filed an application for credit in your name today, you need to know about it right now. Your alerts may be daily, or weekly, or even monthly. Finding out that someone bought a new car in your name a month ago is too late. In the meantime, the thief may have done other damage in your name, as well. 

The services cost a lot of money. The companies that offer these services are offering “peace of mind”, but that peace comes with a steep price. Some of these services have costs that exceed $100 per year. That’s fairly expensive peace, especially since identity theft, while a serious crime, isn’t as common as it is often made out to be. There are estimates that as many as ten million Americans have been victims of identity theft, but those numbers tend to lean towards the high side, and many of those crimes are petty. One person we know was victimized to the tune of a $5.99 per month charge for a dialup Internet service. That was it. The victim reported the problem to her credit card company, was issued a new card, and nothing else ever happened. Would she find it worth her while to pay $125 per year to see if anything else was going on in her name? Probably not.

Everyone will have different needs and comfort levels. By all means, if you think you need such protection, go ahead and buy it. For the more diligent, we recommend simply checking your report several times a year. You can even get a copy of your credit report for free.

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