*Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated Aug 27, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
You might have seen mention of free credit monitoring for affected customers in the news after the Capital One data breach that impacted about 100 million customers in the United States and about 6 million in Canada. But what exactly does credit monitoring do — and do you need it? We’ve got some details to help you understand your options and make an informed decision.
In this article:
- What credit monitoring does
- What credit monitoring doesn’t do
- Where to find free credit monitoring
- What else you can do
- The bottom line
What credit monitoring does
Let’s start with the basics. What is credit monitoring?
Credit monitoring keeps watch over your credit reports and lets you know when something changes on them, says Matt Schulz, chief industry analyst for CompareCards.
So if there’s a new inquiry on your credit report, if you’ve got an account that’s past due or if new credit accounts — such as credit cards or loans — are opened in your name, these are things you would expect a credit monitoring service to alert you to.
Persons affected by the Capital One breach are being offered free credit monitoring and identity protection. However, whether you were a victim or the breach or not, you may want to explore various credit monitoring services, both free and paid, and evaluate what they have to offer.
If you choose a paid service, you should pay close attention to what you’re signing up for and know if the package you purchase includes just basic credit monitoring or something more.
“It’s important to know each company can provide different levels of service,” said Susan Grant, director of consumer protection and privacy at the Consumer Federation of America.
That can range from a company merely providing advice about how to handle a problem, such as a fraudulent account being opened in your name, all the way up to a company getting power of attorney from you and then making contact on your behalf with the parties involved in resolving an identity theft issue.
For example, for a monthly subscription fee, in addition to monitoring changes to your credit report, a paid service may also provide social media identity, public record and dark web monitoring. A paid service might be worthwhile if you’ve had a serious problem with identity theft in the past and feel the need to keep up on a thief’s next move, or if it makes you feel more comfortable knowing a company has your back so you can take action.
What credit monitoring doesn’t do
Unfortunately, these services don’t necessarily prevent identity theft, but can alert you if it happens.
“Monitoring is relatively limited,” Grant said. “It’s checking your credit report at one or two or three of the major agencies [credit bureaus] to look for any indications that your personal information may be being fraudulently used — primarily new accounts opened in your name.”
If something changes on your credit reports maintained by the bureaus (Equifax, Experian and TransUnion), it’s reasonable to expect that to show up on your monitoring. But if you fall victim to fraudulent activity that doesn’t show up on your credit report, such as if someone hacks into one of your existing financial accounts and uses it, credit monitoring won’t detect that. If you’re considering a paid service, check if it offers services beyond just credit monitoring.
To fill in the gaps, it can be smart to check which types of alerts you can set up through your online banking or online credit card accounts. For example, Discover allows its cardholders to set up email or text message alerts for a host of activities, including:
- For purchases made online, by phone or by mail.
- When your minimum payment is due.
- When your payment has posted.
- When your card is declined.
- For cash advances.
- For purchases made outside the U.S.
- When a transaction exceeds a predetermined amount.
- When your balance approaches your credit limit.
“Text alerts can be very useful to have on bank accounts and credit card accounts,” Schulz said. “The vast majority of the time, they’ll just be a reminder of what you’ve done. However, when one pops up that you don’t recognize, it can be a sign that you need to take action.”
Where to find free credit monitoring
“If it is free, then credit monitoring can be a useful tool,” Schulz said. “It never hurts to have another set of eyes watching over your credit information.”
Know that some credit card issuers offer free credit card monitoring services, such as USAA and Discover. For example, once you activate new account alerts with Discover, you’ll be notified if any new credit cards, mortgages, car loans or other accounts appear on your Experian credit report. You’ll also be notified if your Social Security number is found on the dark web. Discover also offers 24/7 fraud monitoring, and will alert you if a transaction on your card seems suspicious.
Another way to keep an eye on what’s going on with your credit is to track your credit score. If you see a sudden drop in your score, that might mean there’s bad behavior on your accounts — and if you’re not responsible, that could be a sign that something is amiss.
FICO® is one of the most commonly used credit scoring models. Some card issuers, such as Discover, also offer free FICO® scores. The Discover Credit Scorecard, for example, is available to the general public, is updated every 30 days and offers alerts on unusual activity.
Finally, you’re entitled by federal law to a free credit report from each of the three major bureaus once per year. You can get your reports by calling Annual Credit Report at 877-322-8228 or by going to AnnualCreditReport.com on the web.
What else you can do
If you’re concerned that someone is going to try to open new accounts with your information, you can freeze your credit. This is called a credit freeze or a security freeze, and it must be done with each credit bureau separately. It prevents new credit accounts from being opened with your information, though it does not prevent activity on existing accounts.
Whenever you get to a point where you’re ready to open new accounts, you have to unfreeze your credit for a specified period of time that you choose. Here’s the contact information for each of the bureaus:
If you don’t want to lock down your credit files, another alternative is instituting a fraud alert on your credit file. The bureaus provide fraud alerts for free, and if you contact one of them to activate a fraud alert, the other two will be alerted as well. A fraud alert means that before a business can open a new credit account for you, they have to verify your identity. The fraud alert will last for one year. If you need to, you can renew it.
Here’s how to contact the bureaus about a fraud alert:
For those who may have already fallen victim to identity theft, Grant pointed toward the government-run identitytheft.gov website as a resource.
“You can get tailored step-by-step instructions about what to do if you’re a victim, depending on what the circumstances are,” she said.
The bottom line
Credit monitoring can be a good tool to help you catch fraudulent activity promptly. However, it’s not preventative — it won’t stop someone from stealing or using your information.
Though there are paid credit monitoring services, you can probably find a free option. For example, if you have a card like the Discover it® Cash Back, the Discover it® Student Cash Back, or the Discover it® Secured, you can activate Discover’s credit monitoring and Social Security alerts at no cost. You should also set up alerts such as spending notifications to protect against things that credit monitoring alone won’t catch.
Finally, it’s important to stay watchful at all times, not only in the aftermath of a data breach.
“Remember that ID theft is a forever problem,” Schulz said. “Once your info is out there, it’s out there for good, which makes it vital that you stay diligent. Keep an eye on your credit report and score. Check your online bank and credit card statements once a week. It’s important. It’s easy. And it matters.”