Do You Need a Credit Monitoring Service?

Restaurants, departments stores, banks, and many other types of businesses have experienced what is often called a "data breach". When this happens, customers who might be affected by the data breach typically get an email letting them know that their information may have been stolen. The letters might suggest that the customer make use of a credit monitoring service. But, do you really need one?

Investopedia defines a "credit monitoring service" as "a system that monitors a consumer's credit reports for signs of possible fraud."

A credit monitoring service notifies consumers when new information shows up on one or more of their accounts. That new information could be a new account, a credit inquiry, or something else. This makes it easy for the consumer to keep an eye on changes and to take action if a change not a legitimate one.

You might need a credit monitoring service if you are unable, or unwilling, to monitor your credit report yourself. It is possible to obtain a free credit report and check it over on your own. It is a good way to find out your credit score, and to see everything is on your credit report.

Credit monitoring services are not free. Some people will not want to pay for a service that they can do themselves.

Are you considering applying for a loan or a mortgage in the next year? You might want to make use of a credit monitoring service.

The bank you are seeking to get a loan or mortgage from is likely to check your credit score. If your score is too low, the bank might not want to loan money to you. Or, the bank might require you to pay a high interest rate. If you have no idea what your credit score is, you could be in for an unpleasant surprise.

There are limitations to what a credit monitoring service can do for you. It cannot prevent identity theft or credit card fraud. That being said, if you have already had your identity or credit card information stolen, a credit monitoring service can help you figure out if something done by the thief has ended up on your credit report.

Credit monitoring reports cannot stop a thief from applying for a credit card in your name. It cannot stop nefarious people from sending you phishing emails. A credit monitoring service is not able to correct errors that are on your credit report.