In this article:
Identity theft and fraud protection for your finances, personal info, and devices.
What Do Credit Monitoring Services Do?
Credit monitoring services track your credit reports from one, two, or three of the major credit bureaus and alert you to changes that could impact your financial health or indicate potential fraud. For a monthly fee, these tools scan for new credit accounts, hard inquiries, credit score changes, and other activities affecting your creditworthiness.
Anyone who wishes to maintain good credit, protect against identity theft, or plan for major purchases — like a house — can benefit from credit monitoring services.
While you can review credit reports on your own, monitoring services automate the process and provide constant vigilance and timely alerts. Paid services like Identity Guard often also include comprehensive identity protection tools that go beyond basic monitoring.
This level of protection is especially helpful if you suspect someone might be using your personal information for financial fraud after a data breach or if you’ve already been the victim of fraud.
What Does Credit Monitoring Do? 4 Key Benefits
Credit monitoring services offer several advantages for managing your financial health and protecting against fraud. Benefits include:
- A comprehensive overview of your credit. While free credit monitoring services often monitor only one credit bureau, quality paid services monitor all three major credit reporting agencies — Experian, Equifax, and TransUnion — ensuring that you don't miss anything important.
- Early fraud detection. By tracking new account openings, credit inquiries, and suspicious activities across all three bureaus, credit monitoring acts as a robust early warning system for signs of identity theft. You’ll get notified if someone attempts to open a credit card or bank account, or take out a loan in your name.
- Notifications of reporting errors. Sometimes, a bureau or vendor may make mistakes that lead to inaccuracies in your credit history — such as errors about late payments or bankruptcies that could impact your credit score. With credit monitoring, you can detect and rectify issues before they damage your credit scores.
- Resources to help build your credit score. Credit monitoring provides regular updates on your credit score. This insight is invaluable for actively building and improving your credit score and financial reputation in the eyes of lenders, especially when preparing for significant purchases like a home or car.
While free options exist, paid providers typically bundle credit monitoring with advanced identity theft protection tools to offer more comprehensive coverage.
For instance, Identity Guard includes Dark Web monitoring, Social Security number (SSN) tracking, and identity recovery services, giving you a more powerful defense against fraud and identity theft.
What Can’t Credit Monitoring Do? 6 Limitations
Credit monitoring is primarily an alert system — not a shield against fraudulent activity. Most services simply notify you of changes to your credit file, regardless of whether it’s good or bad, legitimate or not.
Here are six key shortcomings of credit monitoring services:
- Can't prevent fraud or identity theft. The Consumer Financial Protection Bureau (CFPB) explains that credit protection services "cannot prevent identity theft or the misuse of your personal information." They can only notify you after suspicious activity has occurred on your credit file.
- Won't catch all types of financial fraud. Most credit monitoring services only monitor the three major credit bureaus (and usually only one if it’s a free or basic plan). However, there are numerous smaller, specialized credit bureaus that scammers may exploit to avoid detection.
- Doesn't alert you to every change. Many credit monitoring services have limits on which changes they send alerts about — so you could be left in the dark about potential early warning signs of fraud. For example, if someone changes your home title or personal information on your credit file, you might not get a notification.
- Can't fix errors or remove negative information. While credit monitoring can help you spot inaccuracies, it can't correct them for you. You need to be diligent in following up with the bureaus about incorrect payment history and other issues that could impact your credit score.
- Doesn't guarantee comprehensive protection. No service can protect you from having your personal information stolen. Credit monitoring should be part of a broader strategy for protecting your financial identity and not be seen as a substitute for sound financial hygiene and online privacy habits.
- Won’t stop scammers from targeting you. Con artists can still try to scam you with phishing emails, spam text messages, and other types of fraud. If you want to reduce these threats, you need a paid provider that offers services like anti-phishing protection and Safe Browsing tools.
📚 Related: How To Get 3-Bureau Credit Monitoring (7 Best Options) →
Free vs. Paid Credit Monitoring Services: 5 Ways To Decide Which One You Need
Many companies offer free credit score and monitoring services — but they’re almost all limited to just one-bureau monitoring, basic credit score updates, and minimal alerts. While these tools can be a good starting point, they’re usually not enough to protect your personal finances or warn you if you’ve become the victim of identity theft.
On the other hand, paid services like Identity Guard can monitor all three major credit bureaus and provide additional protection, support, and insurance.
To decide which service is right for you, here are some common scenarios in which you might want to sign up for credit monitoring:
Scenario 1: Your personal information was leaked in a data breach
If you've been notified of a data breach, it’s crucial to tighten your security settings and monitor your financial accounts for signs that identity thieves are using your leaked data for fraud. However, a paid service may not be essential just yet.
“If you freeze your credit, and you manage that appropriately — and it’s not that hard to do it — you really don’t need credit monitoring in and of itself,” said Eva Velasquez, the president of the nonprofit Identity Theft Resource Center (ITRC).
Still, if you’re unable or unwilling to freeze your credit with all three bureaus, a data breach alert could be a critical reason to sign up for credit monitoring.
📚 Related: How To Check If Someone Opened a New Account in Your Name →
Scenario 2: You’ve been the victim of identity fraud or a phishing scam
According to the ITRC, nearly 70% of identity theft victims become repeat victims [*]. If you’ve had your identity stolen in the past, a free credit monitoring service will lack the robust identity monitoring, fast alerts, and dedicated customer support that you’ll need to stay safe.
Instead, you should opt for a paid option that includes identity theft protection, support, and insurance.
Scenario 3: Your bank (or another company) is offering "free" credit monitoring
Many financial institutions offer some form of credit monitoring as a perk for being a customer. In other cases, you may be offered free credit monitoring if a company or service provider you use is hacked in a data breach.
In both cases, you’re most likely only getting barebones protection. Even worse, opting for free credit monitoring from a breached company may prohibit you from pursuing legal action against them or taking part in class action lawsuits.
Review the terms carefully, and consider supplementing with a paid service for full coverage.
Scenario 4: You're focused on building your credit score
In 2023, the U.S. average FICO® Score hit an all-time high of 718 [*]. If your primary goal is credit building, a free service that includes FICO score tracking might be adequate.
Many free tools offer basic credit score tracking and educational resources. However, paid services often provide more detailed credit analysis and personalized advice, which could be valuable if you're planning a major financial investment like buying a home.
Scenario 5: You're on a tight budget
Cost is a significant factor for most American consumers. If paid credit monitoring providers aren't feasible for you, a reputable free service is better than no monitoring at all.
The choice between free and paid credit monitoring services often depends on your specific needs and circumstances. While cost is a consideration, weigh it against the level of protection and features you require to effectively safeguard your financial identity.
📚 Related: The 10 Best Credit Monitoring Services of 2024 →
7 Ways You Can Monitor and Protect Your Credit Today
While credit monitoring services offer comprehensive protection, you can take several steps to monitor and protect your credit on your own. Remember, every American is entitled to free credit reports from each of the three major bureaus each week at AnnualCreditReport.com.
Along with regularly checking your credit reports for errors, here are some additional measures you can take to protect your credit:
- Use strong, unique passwords for all accounts. As the first line of defense, it’s critical to create unique, complex passwords for every online account — financial or not. You can store all login credentials in a secure password manager like the one included with every Identity Guard plan (which can also help alert you to any at-risk or compromised accounts).
- Set up fraud alerts with your financial institutions. Many banks and credit card companies offer notifications for large purchases, personal loan applications, international transactions, and suspicious activity.
- Place a credit freeze with all three bureaus. This measure restricts access to your credit reports, making it much more difficult for fraudsters to open new accounts in your name. You must request the freeze with each bureau individually and remember the PINs that you will need later to “thaw” the files.
- Monitor your financial statements frequently. It’s good to get in the habit of reviewing your bank and credit card statements every week or month to check for unauthorized transactions or reporting errors.
- Dispute any fraudulent information immediately. If you spot suspicious activity, it’s important to react quickly in order to minimize the damage and recover stolen funds. When you spot potential credit card fraud or debit card fraud, make a note of the financial information, including amounts, dates, and vendors.
- Use a credit monitoring app. These apps help you keep track of your credit score and monitor your credit reports for hard inquiries, new loans, and other changes. This overview is useful when you’re trying to build your score or protect against credit fraud.
For optimal protection and peace of mind, consider signing up for a comprehensive credit monitoring service.
Identity Guard’s Ultra Plan provides near real-time protection with three-bureau credit monitoring, one-click Experian credit lock, bank account and credit card monitoring, monthly credit scores, and more. If you become a victim of fraud, you’ll have access to Identity Guard’s U.S.-based White Glove Fraud Resolution support team and up to $1 million in identity theft insurance to cover potential losses.
