Unraveling the differences: a guide to identity theft protection, credit monitoring, and credit protection
We’ll help you decide which service is best for you by breaking down the differences between them.
It’s important to keep your ID secure in order to prevent identity theft and fraud. But with so many options available to help with this, it can be hard to know which one to choose. Different financial institutions offer various protection and monitoring services, but it can be unclear what each one entails. For example, what is the difference between credit protection and ID theft protection, and should you also consider a credit tracker? In this article, we explore the available protection and monitoring services to help you make an informed decision about what you need to safeguard your banking accounts.
What is identity theft protection?
Identity theft can potentially ruin your financial stability and even your entire life. It is the first step of identity fraud, which is why protecting yourself is so important. Identity theft protection involves monitoring your personal information for any suspicious or unusual transactions or credit applications. Although you can do this on your own for free, there are several identity theft protection services available. Companies like LifeLock and IdentityIQ offer basic plans for around $10 a month, which perform regular checks to safeguard your personal information. By setting up identity theft protection, you can prevent further criminal activity and secure your personal details.
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What do credit monitoring services do?
Like identity theft protection, credit monitoring keeps an eye on your personal financial activity.
Unlike identity theft protection, however, credit monitoring services limit their activity to changes on your credit record. So, while loan applications will be highlighted, large expenditure may not be. Credit monitoring services issue alerts, often via SMS or email. These inform you of changes so you can act if the activity is not yours.
For peace of mind, these services are overseen by humans (although some automation is used) and can track your activity with a single credit agency or all three.
Credit monitoring is often available as part of an identity theft protection subscription. However, most banks and card companies offer configurable alerts to help you monitor account activity. It’s worth enabling this feature regardless.
Is there a free alternative to credit monitoring? Yes – you could simply request a free credit report every year from Experian, Equifax, and TransUnion.
What is credit protection?
If you’re concerned about maintaining the health of your credit, credit protection can help you with that. It offers a more specific set of services than identity theft protection and credit monitoring. Credit protection can prevent identity theft by providing you with systems and tools. You’ll also receive alerts about any new or unexpected items on your credit report. This service can also cancel any lost or stolen credit cards without causing you any trouble. In general, credit protection prevents any unauthorized activity from affecting your credit score.
Although it is an automated service, credit protection is now commonly offered as part of bundled bank accounts and credit cards. Therefore, you may already be paying for this service without realizing it. To confirm whether you have credit protection, check your existing credit package agreement.
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Should you consider a credit score tracker?
Beyond the world of credit protection and the fear of identity theft, credit management services can help you to improve your credit rating. This profile management is designed to assist you in building your credit score so that you can apply for a loan or mortgage confidently.
However, these tools can also observe changes to your credit score. So, while a credit score tracker is intended to help you track issues such as missed payments or incorrect defaults, it can also highlight potential identity theft.
The takeaway is that if you are rebuilding your credit and are already using a credit score tracker, you shouldn’t need to sign up for a paid identity theft protection service. You’re already doing everything you need to gain familiarity with your finances and check for undesirable activity.
Should you take identity theft insurance?
Sitting at the top of all these different services is identity theft insurance. Identity theft insurance is available from several providers, including ID protection, credit monitoring, and tracker services outlined above. Some team up with your bank or finance company – others need to be sought out to sign up.
Providers offer these services on a monthly or annual subscription and throw in the added benefit of actual insurance.
You can take this precaution to safeguard your identity, credit, and finances. Identity theft insurance will be activated if you’re hit by identity fraud.
What happens next? Well, your credit will be frozen. Cards will be canceled and reissued to you. Any stolen credit will be refunded to you. Loans taken without your knowledge will be canceled, and the insurance will cover the costs associated. In some cases, identity theft insurance will also cover legal fees if ID fraud-related action is taken against you.
Unsurprisingly, identity theft insurance isn’t cheap. However, as with all personal insurance policies, it should be considered, especially if you consider yourself at risk of ID fraud.
Use these tools to avoid ID fraud
ID fraud can affect anyone. The chances are you’ve already had at least one data item stolen. Mitigating the risk of a thief using your stolen ID for profit is your best defense. Identity theft protection, credit monitoring services, credit protection, credit tracking, and ID theft insurance are all options you can use.
Coupled with a greater awareness of identity theft and better digital security, you can lower the likelihood of being hit by ID fraud.
But there is a caveat: cost. Some of these services are only available with a monthly subscription. Can you afford to cover yourself for possible ID fraud? Given the potentially devastating impact, with millions affected each year, the answer must be “yes.”
Just be sure to check that you’re not already paying for any or all of these services as part of your bank account, credit card, or finance agreement.
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