Credit Monitoring Service Definition

What Is a Credit Monitoring Service?

A credit monitoring service tracks changes in borrower behavior to notify consumers of potential fraud, as well as changes to their creditworthiness.

For example, credit monitoring services can guard against identity theft, when an individual's personal information is stolen and used without the person's permission for nefarious purposes. If a credit card is stolen and used, a credit monitoring service should detect the different buying patterns and alert the credit card account holder.

Key Takeaways

  • A credit monitoring service guards against identity theft and credit card fraud.
  • Credit monitoring services also track changes in borrower behavior to notify consumers of potential fraud.
  • Without credit monitoring services, if an individual's personal information is compromised and used without their knowledge, their ability to access credit could be destroyed.

How Credit Monitoring Works

Although consumers primarily use credit monitoring services to guard against identity theft, a credit monitoring service also tracks a consumer’s credit report and credit scores. Criminal activity related to identity theft can range from illegal purchases at retail or online outlets using a stolen credit card number to filing fake Social Security or Medicare claims. Since thieves use this information without the victim’s knowledge, such criminal activity can be difficult to detect until well after the fact, by which time an individual’s credit could be utterly destroyed.

The best credit monitoring services notify consumers of changes to their credit activity; for example, if a new account has been opened or if a large purchase is made, such as a car. Some credit monitoring services also offer more comprehensive tracking of credit scores, which keeps consumers up to date on the quality of their credit. Fraudsters use social engineering techniques to obtain the personal information of individuals with which to commit identity theft. These techniques include phishing, cat fishing, tailgating, and baiting.

This type of monitoring allows the account holder to plan ahead and repair any issues that might inhibit major credit-based activities, such as applying for an automobile loan or a mortgage.

$52+ billion

Identity theft and fraud scams cost Americans more than $52 billion in losses in 2021, affecting over 42 million people.

Choosing Credit Monitoring Services

Pricing and features vary from service to service. Some financial institutions offer free services that track credit scores on a limited basis, while other paid services offer more comprehensive scans that collect data across the internet on a consumer’s bank account, credit card, or Social Security number. When choosing a credit monitoring service, consumers should note the service limitations. Paid services may offer more comprehensive coverage than free services, but a higher cost does not automatically translate to superior services. While many services offer access to a consumer’s credit score, they may not track that score across all providers. For example, some credit card issuers provide free access to a consumer’s credit scores, which means there is no need to pay a second provider for that service.

While credit monitoring services can provide early warnings of identity theft or fraud, for the most part, such warning occurs after the fact. These services work best as part of a broader strategy to protect and monitor personal information. In particular, consumers should be vigilant before disseminating important personal information including Social Security numbers, bank account numbers, and credit card numbers. In many cases, an awareness of the social engineering techniques used by criminals to obtain such information can provide substantial protection against identity theft. Checking the accuracy of credit card statements and reliable credit monitoring services offer a useful second line of defense.

According to a review done by Investopedia, our top five credit monitoring services for 2022 are Identity Force, Credit Sesame, CompleteID, ID Watchdog, and PrivacyGuard.

What Do Credit Monitoring Services Do?

Credit monitoring services provide you with alerts when certain suspicious activity is detected. It pays attention to credit reports to see when new hits happen or when credit is taken out. Some credit monitoring also scans the dark web for your personal information being sold.

What Do Credit Monitoring Services Offer?

Each credit monitoring service will have its own features and suite of services, but you can generally expect to get access to at least one credit report and credit score, credit monitoring, and account alerts. Premium services will include benefits like identity theft insurance, restoration assistance, dark web surveillance, and three-bureau monitoring.

Are Credit Monitoring Services Free?

Your credit card or bank may provide you with credit monitoring as a complimentary service for being a customer. Other service providers may offer a basic free service with a subscription upgrade. Free services may be sufficient if you only have a few accounts and credit cards, and don’t have too many assets at risk. If you are worried about identity theft, or if your identity has been stolen in the past, using a credit monitoring service is a smart decision Depending on your needs, and whether you need a service just for yourself or for your whole family, you should expect to pay between $8.99 and $34.95 per month for a credit monitoring service.

The Bottom Line

Credit monitoring services keep track of your credit profile and flag suspicious activity that could indicate fraud or identity theft. While there are now several free or complimentary services offered to bank or card customers, paid monitoring services can provide a more in-depth picture and track a wider range of potential threats. With identity theft and card fraud costing Americans billions of dollars each year, it is a good idea to have this type of monitoring in place. However, not all credit monitoring services are made equal. Therefore, it's crucial to do your research to ensure you'll be working with one of the best credit monitoring services currently available.

Article Sources
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  1. AARP. "Identity Fraud Hit 42 Million People in 2021."

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