September 28, 2016

Do I Really Need a Credit Monitoring Service?

ID theft protection services have come under a bit of fire.  There are people who claim that these services don’t do anything that you can’t do for yourself, for free.  Yet this is often based on a misunderstanding of what these services do, and gets them confused with credit report monitoring services.  While ID theft protection services do monitor credit reports, this is not necessarily the only function they perform.  And given you can only pull your own credit report “for free” once a year, one has to question whether or not the free credit monitoring method would actually catch an ID thief in time.

The Javelin 2010 Identity Fraud Security Report actually does list monitoring your credit reports as the easiest way to detect identity theft and shut it down before the problem can grow.  So there’s no question of whether or not monitoring and protection is a good idea.  The argument becomes more a question of whether or not they are worth the price.

The question isn’t so much about the credit reports, however.  Some services, for example, offer PayDay loan monitoring.  PayDay loans generally don’t show up on your credit report (though there are one or two companies, such as Advance America, which do report).  Your credit report won’t be affected if someone uses your identity to commit a crime and winds up on the sex offender registry, or who destroys your driving record.  If the thief only uses your identity to get a job you may never know if all you do is study the report.  You might see an inaccuracy on where you work, but that’s not all that uncommon: if your credit report is anything like most people’s, it’s already listing an employer you haven’t worked for in six years.

And that place of employment would only show up if the thief used it on a credit application anyway.  Apartment applications that used your SSN could go unnoticed for years, as could utility bills that the thief actually pays—they may have taken your identity, for example, because their own history was too spotty to achieve these things.  Of course, their bad history means that sooner or later they probably won’t pay the bills, but they could run on your identity for a year or more before things start hitting collections and showing up on your credit report.

There’s also the matter of insurance and ID theft restoration services, which the top identity theft protection agencies offer.  Those are not items you can get for free or do yourself, and should be taken into consideration when you are trying to make the decision about whether or not this is a good purchase for your family.

Considering that most ID theft protection services don’t cost much more, per month, than the average person spends on a pizza, it may be better to be safe than sorry.

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