Certainly, you are aware of the rampant problem of identity theft and credit card fraud. You have also probably heard about the many “credit monitoring” services. These services claim they can protect your personal finances against hackers and identity thieves. What do the experts say?
Do you really need credit monitoring?
All of the financial and security professionals I spoke to sincerely stress the need for credit monitoring. Using credit monitoring or identity theft protection services helps keep your information safe from criminals. It can also keep your financial data clean. But the two services – “credit monitoring” and “ID theft protection,” are two different things. And my experts say you need to understand what each does and does not provide in order to know which one you really need.
Credit monitoring services alert you to changes on your credit report, such as a new credit account. Identity theft services, on the other hand, more closely track your personally identifiable information in apps, websites, and other places where unusual activity could indicate identity theft. Complete identity theft protection services might also monitor:
- Public information record changes
- Address changes
- Court and arrest records
Some companies offer both credit monitoring and identity theft services, while others provide just one or the other.
The three major credit bureaus – Equifax, Experian, and TransUnion – offer free or paid credit monitoring and identity theft protection services. These include programs such as Experian CreditWorks, Equifax Complete, and TransUnion TrueIdentity. There are many other private companies, such as LifeLock, Zander, and IdentityForce, that offer paid services.
Whether you can get by with a free service or need to upgrade to a paid subscription plan depends on your personal situation. If you don’t have the time to monitor your credit reports, or if you have been a victim of identity theft, you may want paid services.
“These services can do things on your behalf that would otherwise take a considerable amount of time,” says Eva Velasquez, president and CEO of the Identity Theft Resource Center, a nonprofit that helps identity theft victims. She cites the example of scraping public databases.
However, as scary as identity theft can be, many consumers can get by with the free services or rely on their own credit issuers. You might also be able to get free credit monitoring support. Check with your credit card issuer, employer, or home insurance company for access to free or low-cost monitoring. Even your Costco or AARP membership may come with it.
If you are considering signing up with one of the paid services, according to Susan Grant, director of consumer protection and privacy at the nonprofit advocacy group Consumer Federation of America, here are the questions you should ask:
How extensive is the credit monitoring?
Does the service monitor report from all three of the major credit bureaus? Does it monitor other smaller credit reporting agencies? Also, see if it looks at public records. A more complete service can offer more value, but the extent of monitoring you need depends on your comfort level.
Do you also need identity theft insurance, and what does it cover?
Most major identity theft protection services provide this insurance, but it generally doesn’t reimburse you for financial losses from the theft. Because you may already be covered under your homeowners or renter’s insurance policy, ask to see terms, conditions, and exclusions of coverage.
Will the service help you recover from a data breach?
Even if the company promises comprehensive assistance, drill down on the details.
Just remember, even signing up with the best and most expensive service is no guarantee that you are safe from identity theft. The best you can do is minimize the risks and or the damage if it does occur.
Have you been a victim of ID theft? Did you have a protection service at the time? How did they help?