Credit Report Monitoring – Do You Need It?

I read an interesting piece in an article in Time Magazine about
5 things you should never buy in a store.  It included
unlimited cell phone minutes, bottled water,  and alternative
flu remedies.  It of course cautioned that there are
exceptions to the rules.  For instance, despite the reports
that most bottled water is simply modified tap water, it would be
preferred to the tap water in a foreign country where the water
system is in question. 

This got me thinking about consumer services and whether these
are things we should spend out money on.  Are credit
monitoring services something we should be investing in, or is this
one of those things that sound like a very helpful consumer
product, but is actually entirely unnecessary?

The argument against the need for it would be that the rights we
all have under the Fair Credit
Reporting Act
truly rule out the real need to spend money on
such a service.  Under the Fair Credit
Reporting Act
, we all have certain rights that, if properly
followed, can sufficiently protect our credit rating without the
need to spend additional funds on a monitoring service. 
First, there is the right to obtain a free credit report once a
year from each credit
reporting agency
.  Without once extra cent, you can
contact each of the three credit reporting agencies and obtain your
report once every 12 month period.  In addition, should you
get denied credit, or have a current creditor take adverse action
against you, you have the right to a free report.  Otherwise,
the expense to purchase one more report  throughout the year
is relatively cheap.  I have seen all three credit reporting
agencies in a 3 in 1 for as low as $12.95 on line.  So in sum,
you can see your credit report once every six months for under
$13.00 for the whole year.  From my research on line, some of
the more highly touted credit monitoring services are $15.00 per
month. 

Should we find out that our credit
report contains inaccurate
and harmful information, the Fair
Credit Reporting Act provides for a consumer’s right to have the
creditors and the credit reporting agencies perform a prompt
investigation into the inaccuracy and report the results within 30
days.  We have covered this in previous articles. To read
those articles, click
here

Regardless of whether you learn of a problem with your credit
through a monitoring service or from your own regular reviews of
your credit report, this 30 day dispute process is a must in order
to fully protect your rights under the FCRA.   Under the
FCRA, you cannot recover for losses incurred prior to your dispute
(unless you have evidence that the credit bureaus had some other
form of notice that the account on your report was
inaccurate).  If you have no plans on applying for credit in
the immediate future, having a credit monitoring service would have
done you no good here. 

There is good argument for the need for these services.  A
credit monitoring service is good for:
>People who anticipate a need for their credit in the near
future for a significant purpose such as a home refinance or auto
purchase.  If you are planning on refinancing a mortgage,
buying a car, renting an apartment, then you want to prepare. 
A monitoring service can tell you how your score looks now, what
you need to improve it, and what steps you can take over the next
few months.  In addition, if something pops on your report,
you would want to know about it immediately so it can be tackled
right away.
>True identity theft
victims.  By “true” victims, I mean that the persons identity
was severely compromised by a stranger that has been opening
multiple accounts in another’s name.  This is a dangerous
situation where large amounts of money can be effectively stolen in
a relatively short period of time.  A monitoring service would
alert to each and every breach. 

The rest of us, those who do not have major transactions ahead
wherein a high score is a must, really should not have to spend the
extra money.  The Fair Credit
Reporting Act
, and proper utilization of your rights
thereunder, can be a sufficient monitoring tool.