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GUEST POST BY INTERN BOBBY RUNG | CREDIT MONITORING PROS AND CONS

“Credit Monitoring” is when one screens his or her own credit history in order to detect any suspicious activities or changes. Various companies such as Lifelock, offers their services on a subscription basis to help people who are interested in the service to detect credit related fraud and identity theft. However, is this extra layer of security worth it? Credit Monitoring both have pros and cons, which has to be looked at prior to deciding weather or not to get the service.

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To begin with, lets look at the pros to the credit monitoring service. Credit monitoring is more useful and appealing to those who have already been victims to identity theft or for those who are most likely to be victimized. The service is really useful for spotting certain problems such as somebody opening a new account or is using stolen information. In addition to detecting anomalies in someone’s credit report, services such as Experian Credit Tracker Credit Monitoring, also will reimburse you up to $50,000 and give you access to a fraud resolution specialist, if your identity is stolen. Lynnette Khalfani- Cox, also known as the “Money Coach,” believes that credit monitoring is a great tool worth investing in. She states that the credit monitoring services are a great tool in saving money and building one’s credit score and can help prevent identity theft or at least notify you as soon as possible. Take for example; if you were positive in applying for a mortgage in the coming year, monitoring your credit score would be a smart move in order to get the best possible mortgage rate.

Now lets think about the cons of the credit monitoring service. Is the service worth the money? Yes, it is true that credit monitoring is useful in detecting identity theft or credit fraud, but the fact of the matter is, it does not PREVENT it. At best, it will notify you as early as possible when there is an anomaly in your credit report, but the theft will most likely have already happened. Credit monitoring also cannot detect all identity theft or credit card fraud. Generally it is good in detecting certain problems such as somebody opening a new account or is using stolen information, but cannot detect a problem when somebody uses a stolen identity for a job, a cell phone, or using just the Social Security Number (SSN), but not the name to open new accounts, are a few things that would not necessarily be reported to a credit- reporting agency, which mean that it will not be picked up by credit monitoring. There is also the down side of numerous alerts, emails, and phone calls from all three credit bureaus at once due to a fraudulent application for credit. Other issues are “fragmented files.” These type of files are an issue because identity thieves commonly try to avoid being detected by using only part of someone’s identity to sign up for an account or to obtain credit, which will create a whole new file, the “fragmented file,” and this whole new file will most likely not show up right away in the victim’s main credit file and in turn would not trigger an alert. Another thing that credit-monitoring service fails to do is prevent the theft from happening in the first place. The most that it can do is notify someone as early as possible in order to take action and with some services, a reimbursement up to a certain amount depending on the service that you choose, but most of the reimbursement offers don’t apply if your identity is stolen before you sign up for the service, even if you are completely unaware of the theft. The Consumer Federation of America also states that no identity theft protection can absolutely protect someone from this fast growing crime, which makes the credit monitoring services not a good use of consumer’s money, because they are not sufficient enough in protecting against identity theft.

However, there is an alternative that you can do and it’s the “Do It Yourself,” approach. You can save yourself the monthly fees for credit monitoring and monitor your own credit history for free or spend a small amount for a little extra protection such as a 90- day fraud alert. Consumers could simply get their free annual credit reports from the three major bureaus and look over the activity on their bank and credit card accounts on their own without spending a penny. As previously mentioned, the 90- days fraud alert, is an extra step a consumer can take to protect themselves even further by paying a one- time fee to enact a credit freeze, which will prevent any creditors from accessing the credit reports until it is unfrozen by the consumer.

In conclusion, identity thieves operate in many ways from stealing your mail to taking your wallet. Some belong to organized crime and some use fake checks with real account information, or can fish for information online via scams or hacks. Though you can receive a free credit report once a year, a lot can happen in that year. In addition the three reports don’t always contain the same identical information, which can make it possible to miss a red flag in the report if you only check it once a year. That is why credit monitoring is a good thing to have as an extra layer of security, but prior to purchasing a service from one of the companies such as Lifelok or Experian Credit Tracker Credit Monitoring, a consumer would have to weigh the ongoing costs of having the service against their benefits, and be aware of the shortcomings that the service have such as not being able to detect fraud if partial information is stolen, SSN is used only, or if stolen information is used for a cell phone or job. If monitoring your own credit history is sufficient for you, then credit monitoring is not necessary, but if you want an extra layer of security, adding a 90- day fraud alert is also an option next to credit monitoring. Credit monitoring certainly has pros and cons and is not for everyone, so prior to finding a service, definitely think about the costs and if it will be beneficial to you.

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