Should I Pay for Credit Monitoring?

Credit monitoring and identity theft protection services—which run $120 to $200 a year—are definitely not necessary. Most of what these products provide you can easily do yourself, and for free.

Keep in mind that while these products are often marketed as preventative tools, they do not actually guard against identity theft. Rather, what they typically do is to regularly review your file from one or more credit bureaus, and then alert you whenever changes have been made that could signal that you’ve already been a victim (such as a request for new credit).

You can easily do the same by taking advantage of your legal right to access one free report from each of the three bureaus every 12 months via annualcreditreport.com. If you stagger your requests, you can check a credit report every four months for red flags.

If you’ve been notified of a security breach, had your wallet stolen, or think you’re likely to be victimized, say by a jilted ex, you should place a 90-day fraud alert on your file with the credit agencies, and update this alert after 90 days if needed. When you place the alert, you’re entitled to a free credit report from each bureau in addition to your one free annual report from each. This means that when you’re most vulnerable to ID theft, you have access to more frequent reports.

Of course, “If a company offers you credit monitoring for free after a breach, take it,” says U.S. Public Interest Research Group’s Ed Mierzwinski, “but never ever pay for it.”

If you’re looking to lock down your credit in order to keep thieves out, there’s a better way than buying credit monitoring: Simply place a freeze on your credit files. This instructs the bureaus to prevent new creditors from viewing your credit report and score. Because lenders usually won’t open new lines of credit without viewing your score first, this can prevent fraudsters from opening new accounts in your name.

“Credit monitoring is like shutting the door after the horse has left the barn, whereas a credit freeze is a preventative measure,” says Chi Chi Wu of the National Consumer Law Center.