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Monitoring Your Credit

The keys to your financial identity jangle in the pockets of the Big Three credit bureaus: Equifax, Experian, and TransUnion. When you apply for a credit card, sign up for a wireless plan, or apply for a job, the company you're trying to do business with is likely to request a copy of your credit report. If anyone steals your identity, that person's bad behavior goes on your report, hurting your chances for a loan, a phone, or a job.

Federal law entitles you to a free annual report from each of the Big Three. You also qualify for a free copy if you've recently been denied credit or if you're an identity-theft victim. The bureaus make no money by supplying free credit reports, but they make a lot of money--more than $1 billion annually, according to Javelin Strategy and Research president James Van Dyke--by selling credit-monitoring services.

For $5 to $20 per month, a credit-monitoring service will alert you whenever your report changes. If a thief opens new accounts in your name, you'll usually find out within a few days. Most monitoring services offer online credit reports, online credit scores (showing your chances of obtaining credit), and tools for managing and improving your credit rating.

But a credit-monitoring service won't tell you if someone steals your credit card and runs up huge bills; for that you must check your monthly billing statements. Furthermore, if you receive an alert about a dubious inquiry, you'll have to identify it as bogus and contact the credit bureaus on your own.

Our real-world tests of two major credit-monitoring services yielded mixed results. First we signed up for TrueCredit's three-in-one monitoring service, which promises to deliver e-mail alerts from all three bureaus for $15 a month. The first two times our tester tried to open a new credit account, TrueCredit failed to issue an alert. A third test a month later was more successful.

"The likely explanation is that [the bureaus] had not yet completed the processing required on their end by the time the first two inquiries were made," says Steve Katz, a spokesperson for TrueCredit's parent company, TransUnion.

Using TrueCredit was truly annoying in other ways. Whenever we accessed our account or received an e-mail alert, we had to wade through advertisements for credit scores, low-cost credit cards, and other services.

We had better luck with Identity Guard, whose parent company, Intersections, provides identity-theft protection sold through Citibank, Equifax, GE, and other firms. We signed up for Identity Guard's $17-per-month Total Protection plan--which provides credit monitoring, credit scores, security software, and public-records searches that identify names, addresses, and property associated with your identity, along with things like licenses, tax liens, and criminal convictions--and it alerted us to every change made in our credit reports.

Unfortunately, we found Identity Guard's interface confusing and its customer service line unhelpful. One particular annoyance: Our account page advertised services already covered under the Total Protection plan, inviting unwary consumers to buy the same services twice under different names. Tim Walston, a senior vice president for Intersections, explains that the ads are provided for people who may want to obtain fresh reports between Identity Guard's quarterly updates.