According to Javelin Strategy and Research about 24 million customers have signed up for credit monitoring services. For $60-$180 per year, Experian, Equifax and TransUnion state they can protect you from identity theft by regularly watching for changes in your credit report. Unfortunately, credit monitoring is overrated and overpriced.

1. Credit Monitoring often only monitors one credit bureau. Since creditors don’t always report to all three credit bureaus, you may be missing out on important notifications.
2. Speed of notification is a problem. Some credit monitoring services report only once per week. In addition, delays in reporting information by the credit bureaus means notifications could take up to 45 days to go out. Consumers need information quickly if their identities are in jeopardy.
3. Credit monitoring is reactive and not proactive. It doesn’t stop the issuance of credit to an identity thief. It only notifies you that someone has opened an account in your name or has inquired about credit in your name.

Reviewing your Credit Reports, adding Fraud Alerts to your credit files and Credit Card/Social Security Number Monitoring are much more effective ways to prevent identity theft.

Instead of paying for credit monitoring, do the monitoring yourself by ordering copies of your credit report from all three credit bureaus (Experian, Equifax and TransUnion) and review them carefully. There can be significant differences between your reports at the three bureaus, depending on which bureau each of your creditors report to.

Four months after ordering your first bureau report, order a copy of your report from the next bureau, and four months after that, the third credit bureau. This way, you get a free copy every four months. Review the reports carefully for any unexpected activity or accounts you don’t recognize.

Adding a fraud alerts to your credit report warns potential creditors to contact you by phone before granting credit in your name. Would you rather

1. Get a phone call from a credit asking if you applied for credit or
2. Wait to get an email from a credit monitoring service letting you know an account has been opened in your name?

I think the answer is obvious.

Lastly, none of the credit monitoring services offers proactive monitoring of social security numbers and credit card. The latest identity theft prevention technology scourers internet chat rooms, FTP sites, and other directories and sites for signs of social security number and credit card number fraud. A recent Gartner Group consulting firm report states that this type of monitoring may “overtake credit-report monitoring as an effective identity theft tool by year-end 2009.” See our premium identity protect for more details on this technology.

Without a charge, freeIDENTITYprotect will guide you through the easy steps to access your free credit reports and will notify you every 4 months that it is time to order a new report. The service will also help you add a fraud alert to your credit report and will notify you when it is time to renew it.