credit

When should I use credit-monitoring services?

You may have heard that it's important to know what's in your credit history, especially before taking out a loan. The easiest way to do that is to pull your free credit report once a year. That way, you can check for errors or, even worse, fraudulent activity.

But is that enough?

Some companies, including the major players in the credit reporting industry, offer credit-monitoring services to help consumers keep an eye on changes in their credit reports that might affect their credit scores. Typically, the companies alert consumers by email, text or through a mobile app. Some services even provide peeks at your changing credit score.

The national credit bureaus -- Experian, Equifax and TransUnion -- along with FICO, the developer of the most widely used credit score, all offer some kind of credit tracking service, ranging from $14.95 to $17.95 per month.

Third-party companies like LifeLock and Identity Guard feature monitoring services along with extras such as address monitoring, public record monitoring and password protection. The prices are about as costly, between $10 and $25 per month. Even some banks offer credit monitoring services for an extra monthly charge.

"We see people signing up for our credit monitoring products for multiple reasons," says Ken Chaplin, senior vice president of marketing at Experian Consumer Services. "Whether it's to see their scores before making a large purchase like a house or a car, check their reports for errors or monitor for identity theft."

To protect your identity

One of the biggest selling points for credit-monitoring services is as a fraud indicator, especially for those who have already been victimized before by identity theft. These services offer almost real-time alerts when a major change has occurred, such as balance changes, newly opened accounts or new activity on old accounts, says Anthony Sprauve, spokesman for myFICO.com, the consumer education division of FICO. "All of which may assist in confirming known activity and identifying possible identity theft," he says.

Of course, by the time you receive the alert, the fraud has already occurred. A cheaper and better way to protect yourself is a credit or security freeze, says John Ulzheimer, credit expert at Credit Sesame.

This method keeps new creditors from pulling your credit report and reporting information about you to the credit bureaus. Only creditors that have an existing relationship with you can get your credit report and report to the bureaus.

That means if a depraved individual wants to open a new credit card account under your name to fund a shopping spree, it won't be possible because the credit card issuer won't be able to pull your credit report as part of the application process. The fraud is stopped before it can even happen.

The fees for credit freezes vary by state, usually between $5 and $20, along with another fee to unfreeze your credit report. Identity theft victims typically can get a free credit freeze with documentation of the crime, such as a police report. Some states offer reduced fees for senior citizens as well.

"If you're genuinely concerned about identity theft then a credit freeze is a much better alternative," says Ulzheimer.

Credit freeze fees by state

StateFee to freezeFee to unfreeze temporarilyFee to unfreeze permanentlyWaiver to freezeWaiver to unfreeze temporarilyWaiver to unfreeze permanently
State: AlabamaFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: AlaskaFee to freeze: $5Fee to unfreeze temporarily: $2Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: N/A
State: ArizonaFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: ArkansasFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theft with documentation; People over 65Waiver to unfreeze permanently: Victims of ID theft with documentation; People over 65
State: CaliforniaFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theft with documentation; People over 65 pay $5Waiver to unfreeze temporarily: Victims of ID theft with documentation; People over 65 pay $5Waiver to unfreeze permanently: Victims of ID theft with documentation; People over 65 pay $5
State: ColoradoFee to freeze: NoneFee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: N/AWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: ConnecticutFee to freeze: $10.64Fee to unfreeze temporarily: $10.64Fee to unfreeze permanently: $10.64Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: Sierra at DelawareFee to freeze: $10Fee to unfreeze temporarily: NoneFee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theft with documentation; People over 65 pay $5Waiver to unfreeze temporarily: N/AWaiver to unfreeze permanently: N/A
State: District of ColumbiaFee to freeze: $10Fee to unfreeze temporarily: NoneFee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: N/AWaiver to unfreeze permanently: N/A
State: FloridaFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: GeorgiaFee to freeze: $3Fee to unfreeze temporarily: $3Fee to unfreeze permanently: $3Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theft with documentation; People over 65Waiver to unfreeze permanently: Victims of ID theft with documentation; People over 65
State: HawaiiFee to freeze: $5.20Fee to unfreeze temporarily: $5.20Fee to unfreeze permanently: $5.20Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: IdahoFee to freeze: $6Fee to unfreeze temporarily: $6Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: N/A
State: IllinoisFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: IndianaFee to freeze: NoneFee to unfreeze temporarily: NoneFee to unfreeze permanently: NoneWaiver to freeze: N/AWaiver to unfreeze temporarily:Waiver to unfreeze permanently:
State: IowaFee to freeze: $10Fee to unfreeze temporarily: $12Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: None
State: KansasFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: KentuckyFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: LouisianaFee to freeze: $10Fee to unfreeze temporarily: $8Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theft with documentation; People over 62Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: MaineFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: MarylandFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: MassachusettsFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theft and their spousesWaiver to unfreeze temporarily: Victims of ID theft and their spousesWaiver to unfreeze permanently: Victims of ID theft and their spouses
State: MichiganFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: MinnesotaFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: MississippiFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: MissouriFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: N/A
State: MontanaFee to freeze: $3Fee to unfreeze temporarily: $3Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: N/A
State: NebraskaFee to freeze: $3Fee to unfreeze temporarily: $3Fee to unfreeze permanently: $3Waiver to freeze: Victims of ID theft; Minors under 19Waiver to unfreeze temporarily: Victims of ID theft; Minors under 19Waiver to unfreeze permanently: Victims of ID theft; Minors under 19
State: NevadaFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: New HampshireFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: New JerseyFee to freeze: NoneFee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: N/AWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: New MexicoFee to freeze: $10.50Fee to unfreeze temporarily: $5.25Fee to unfreeze permanently: $5.25Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: New YorkFee to freeze: NoneFee to unfreeze temporarily: $5.44Fee to unfreeze permanently: $5.44Waiver to freeze: N/AWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: North CarolinaFee to freeze: NoneFee to unfreeze temporarily: NoneFee to unfreeze permanently: NoneWaiver to freeze: N/AWaiver to unfreeze temporarily:Waiver to unfreeze permanently:
State: North DakotaFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently:
State: OhioFee to freeze: $5Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: OklahomaFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: OregonFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: PennsylvaniaFee to freeze: $10.70Fee to unfreeze temporarily: $10.70Fee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: N/A
State: Rhode IslandFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: South CarolinaFee to freeze: NoneFee to unfreeze temporarily: NoneFee to unfreeze permanently: NoneWaiver to freeze: N/AWaiver to unfreeze temporarily: N/AWaiver to unfreeze permanently: N/A
State: South DakotaFee to freeze: $10.60Fee to unfreeze temporarily: $10.60Fee to unfreeze permanently: $10.60Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: TennesseeFee to freeze: $7.50Fee to unfreeze temporarily: NoneFee to unfreeze permanently: $5.00Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily:Waiver to unfreeze permanently: Victims of ID theft
State: TexasFee to freeze: $10.83Fee to unfreeze temporarily: $10.83Fee to unfreeze permanently: $10.83Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: UtahFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: VermontFee to freeze: $10Fee to unfreeze temporarily: $5Fee to unfreeze permanently: $5Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: VirginiaFee to freeze: $10Fee to unfreeze temporarily: NoneFee to unfreeze permanently: NoneWaiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: N/AWaiver to unfreeze permanently: N/A
State: WashingtonFee to freeze: $10.95Fee to unfreeze temporarily: $10.95Fee to unfreeze permanently: $10.95Waiver to freeze: Victims of ID theft with documentation; People over 65Waiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: West VirginiaFee to freeze: $5.30Fee to unfreeze temporarily: $5.30Fee to unfreeze permanently: $5.30Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: WisconsinFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft
State: WyomingFee to freeze: $10Fee to unfreeze temporarily: $10Fee to unfreeze permanently: $10Waiver to freeze: Victims of ID theftWaiver to unfreeze temporarily: Victims of ID theftWaiver to unfreeze permanently: Victims of ID theft

Source: Experian

Help with goal-setting

That doesn't mean credit monitoring is useless, says Ulzheimer. He subscribes to a credit-monitoring service that shows how his credit score changes. That way, he can see how his financial behaviors affect his credit score.

This can be useful for someone who is preparing to buy a house or car or take out a student loan and is working to improve his or her credit score before the purchase.

"You can see (your score) going up or down and use that as a measure to determine the effectiveness of tactics you are employing to manage your financial health," says Sprauve.

What to look for

Chaplin says the best services offer access to credit reports from all three major bureaus. For example, some free credit-monitoring services track only a credit report from one of the three bureaus. That's insufficient because not all lenders report to all three credit bureaus. So, one credit report may contain different information from another.

Chaplin is also a fan of services that offer credit scores and daily monitoring at the credit bureaus along with alerts if there are any material changes to your report. The services should also offer educational materials, so consumers better understand credit.

"Knowing your credit is essential to understanding your financial health," he says. "Your credit score can affect your ability to make important purchases, like a home or car."

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