Now that everyone is so obsessed with their credit reports and FICO scores, credit monitoring services have popped up everywhere. For a modest recurring fee–one that easily adds up to over $100 a year–you can have a company constantly watch your credit report and alert you of any changes in it, so you can always be on top of your creditworthiness. But should you bother? The consumer director of the U.S. Public Interest Research Groups federation (U.S. PIRG) tells BusinessWeek that credit monitoring is a “protection racket” that turns people into “financial hypochondriacs… who are scared of their own financial shadows.”

Naturally, the people who work at credit monitoring companies disagree, pointing out that when you pull a credit report, it’s technically no longer accurate after one day (assuming it’s accurate to begin with), and that a credit monitoring service can alert you almost immediately if you’re a victim of identity theft.

On the other hand, the U.S. PIRG director notes that if you really need to always know your credit history, it would be cheaper to just pay for credit reports several times a year:

Mierzwinski says nobody needs ongoing credit monitoring. He advises anyone applying for a mortgage to audit their three credit reports several months before closing on a home to make sure they know what’s on them and to clear up inaccuracies that could affect their mortgage rate. For those who want to look at their credit reports more often, it’s cheaper to buy once or twice a year than to pay monthly credit-monitoring fees because the reports cost only $8 to $15, he says. Mierzwinski disapproves of the 7-day trial period companies typically offer because most commercial offers give consumers 30 days to cancel purchases.

Remember that you can always get three free credit reports every 12 months–one each from Experian, TransUnion, and Equifax–only at annualcreditreport.com.

“Monitoring Sites Draw Credit ‘Hypochondriacs'” [BusinessWeek]

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