What Is Credit Monitoring, Really?

Millions of Americans have received free access to credit monitoring products — it’s pretty much a standard “we’re sorry” gesture from any company or organization that loses customer data after a cyberattack. While companies are handing out credit monitoring like it’s candy at a parade, consumers often don’t understand what they’re getting and that different products vary greatly in what they can and can’t do for you.

You can monitor your own credit by simply looking at credit report information and noting changes to it. You can request your free annual credit reports and compare them to ones from the same bureau over time. It can also be as detailed as subscribing to a credit monitoring service that constantly watches for changes made to any or all of your reports from the three credit bureaus (Equifax, Experian and TransUnion) and gives you details of the changes as soon as they have been reported to a bureau. There are dozens of credit monitoring tools you can use, and they vary in how detailed the information is that they provide.

Because of the variety, it can be tough to understand exactly what happens when you get a free credit monitoring offer.

“There is no standard definition of credit monitoring,” said Tom Quinn, vice president of myFICO, in an email to Credit.com. FICO, a credit-score giant, offers credit monitoring products. “[S]ome services are closer to what most people think of as ID theft monitoring, and other services are closer to traditional credit report monitoring.” In other words, credit monitoring may be just one part of a product with many tools for tracking use of your personally identifiable information. Identity theft protection may include a lot of things, like fraud resolution or identity theft insurance — credit monitoring may or may not be part of an identity theft protection product.

Can Fraud Slip Through?

Here’s the biggest thing to note about credit monitoring: It’s based on credit reports. Until a data furnisher (perhaps a creditor) sends information to a credit bureau, a new account, a credit inquiry, a late payment, or any one of a number of pieces of credit data, is not going to show up on a credit report. As such, it may not immediately be caught by credit monitoring. Say someone gets her hands on your Social Security number and uses it to open a credit card. If the credit card company doesn’t send its data to a bureau for a few weeks, that thief may have racked up a ton of credit card debt tied to your credit file before it’s caught by monitoring.

Some things may take a very long time to show up on your credit file (court-reported items like liens and judgments sometimes surface weeks after they occur), and depending how frequently your credit monitoring service scans for changes, you may not find out about it until well after it has been reported, said Michael Bruemmer, Experian’s vice president for consumer protection.

“Sometimes when credit monitoring is done it’s only done on a monthly basis or a weekly basis,” Bruemmer said. When those alerts come, they may not be very detailed. “Sometimes, an alert says, ‘Your credit file has changed. Pay for us to tell you what it is.'”

He pointed out other ways credit monitoring may not immediately tell you something has happened:

“In some cases the monitoring is only looking for maybe new credit openings,” he said. “It may not look at inquiries, it may not look at public records.” Additionally, it may not review information from all three bureaus.

Because credit monitoring tools vary so widely, you’ll want to read the details of what a company offers you after a data breach. Having a free resource is certainly helpful, but it may not cover all aspects of your credit history, which is something you want to watch closely throughout your life. (You can check your credit scores for free once a month on Credit.com, to watch for changes to your credit file from month to month.)