With identity theft being such a big threat these days, it's very important to safeguard your personal information. But even those who are extra careful about revealing their bank account numbers and other data online can still fall victim to identity theft, as criminals think nothing of rooting through garbage cans to snatch up canceled checks, bills, and other financial paperwork. The only way to be 100 percent sure that nothing like this is happening is to monitor your financial activity like a hawk. But let's be honest here: how many of us have the time, energy, or inclination to actually do so? That's where credit monitoring services can come in handy.

A credit monitoring service is a company that routinely checks with the three major credit reporting bureaus (TransUnion, Equifax, and Experian) to make sure that nothing's amiss. They look for red flags, such as inquiries about opening new bank accounts or requesting loans, which could be an indication that someone has illegally obtained your personal data. Once a red flag is noticed the credit monitoring service will alert you immediately so you can take steps to nip the problem in the bud.

Is this something that most people can do on their own? Well, sort of. It's true that everyone is entitled to a free report from one of the three agencies mentioned above, but you can only get it once every 12 months. A lot can happen in 12 months, so I wouldn't recommend relying on a once a year report to tell you if your identity has been stolen or not. Then if you want more reports than that, you'll have to pay extra fees. In that case, subscribing to one of the many credit monitoring services out there might be a better option. And of course, you can check your bank balances and charge card activities on a daily or weekly basis, which will tell you if anyone is illicitly accessing your accounts. But how would you know if someone has applied for a loan in your name? You ordinarily wouldn't -- unless you had a credit monitoring service working for you.

Most credit monitoring services operate in more or less the same way, so choosing one comes down to the details. Be sure to review exactly what's included in your membership and ask questions about anything you don't understand. Some credit monitoring services offer a basic package and then charge extra for additional perks, like on-demand reviews and things like that. If you're ok with just the basics, then go for the company that offers the lowest prices.

Credit monitoring services can be a convenient way to stay on top of what's happening with your personal finances. Identity theft can lead to a long, harrowing process of phone calls, paperwork, and red tape to clear your name, so this ounce of prevention is well worth your while!

Labels: article finance