Identity theft can be a time-consuming and costly hassle, but there are measures you can take to protect your personal information and avoid the headache. One tool that can help is credit monitoring. But what exactly does credit monitoring do? And more importantly, is it enough to keep you safe?
There are three primary national consumer credit bureaus, and you may have a credit report with more than one. Although the reports are often similar, they’re not necessarily identical because some financial institutions only report data to one or two of the bureaus, and some don’t report data to any of them.
At their simplest, credit monitoring services will look for potentially suspicious changes in your credit reports based on your prior activity and send you an alert if they detect an issue. These could include a new hard inquiry (when you apply for credit and a creditor checks your report) or a new account. Either could be an indication that someone is using your information to fraudulently open financial accounts.
They may also alert you to new public records, such as a bankruptcy, and to changes to the personal information section, such as a new name or address on your report.
Credit monitoring services can range in price and function. You can find the basic monitoring and alert services for free. However, they may only monitor one or two of your credit reports, so you could have to sign up for several to get full coverage.
Services that have a monthly or annual subscription fee may monitor your credit reports from all three bureaus. More robust identity monitoring services include additional features, such as fraud resolution assistance, reimbursements for lost funds or expenses related to identity theft and scanning the internet for your personal information. They may alert you if your info is used to open financial accounts that aren’t generally on the major three consumer credit reports, such as a bank account or payday loan.
An alert may be too late, but it can still be helpful. Credit monitoring services are reactive by nature. If you’re alerted that someone has tried to use (or successfully used) your personal information, then in a sense it’s too late – you’re already a victim of identity theft.
However, being able to react right away can help limit the damage because you can contact the companies to have the fraudulent accounts shut down. Also, here are a few things you can do to help keep your personal information secure. Don't carry your Social Security card in your wallet, and only carry other documents with sensitive information (such as a Medicare card) when you know you’ll need them. Generally, don’t share your personal information if you receive an incoming call, even if the person claims to be from your bank or a government agency. Instead, tell the caller you will call them back and use the entity’s actual number (which can usually be found on a bill, statement of account or website) to do so. Before throwing it out, shred or cut up material that has personal information, including old bank statements, credit cards and insurance forms. Install antivirus software on your computer and keep it up to date. Use different, long passwords for your online accounts.
At a minimum, having some form of free credit monitoring or making a practice of regularly checking your credit reports for suspicious changes could help you avoid major problems down the road. If you’re concerned about identity theft, taking steps to secure your personal information and paying for a service that includes resolution assistance and reimbursements could be a good idea.
Hugh Norton directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney.