The following will give you details about credit monitoring and fraud alerts and will allow you to make an informed decision as to which service is the right choice for you.
It wasn’t too long ago that credit monitoring was your only choice for identity protection and the bureaus only monitored their own credit reports. The rise of new competition from proactive identity protection companies like LifeLock, Debix, and Trusted Id ended the monopoly the credit bureaus once had and forced them to further expand their offerings. Pressure at the state and federal levels also forced the credit bureaus to change requiring them to offer free fraud alerts for anyone requesting them per the FACT Act passed by Congress.
A fraud alert requires the bureaus to put your phone number in your credit file. A creditor such as a bank is then required to verify your identity which is routinely done by calling your phone number for approval of the loan or transaction that they are processing. These fraud alerts expire every 90 days and must be renewed. They are not full-proof but are the single most important step to take to protect your identity.
The Fact Act also required all three credit bureaus to report any fraud alert they receive to the other two bureaus, but some studies have shown they do not always do this. We advice you to call all three bureaus yourself to insure the fraud alerts are in place or use an identity protection company to make sure the fraud alert is set properly. There is no big secret to placing fraud alerts, just call the bureaus, and keep doing it every 90 days. A better option is to have Debix set them for you, they only charge $24 per year and offer a lot of other great benefits including the most important one – identity theft insurance. More on fraud alert companies later, but first lets see how credit monitoring compares.
The essential difference between fraud alerts and credit monitoring is that credit monitoring is not proactive in that you are only informed about credit changes after they have already happened, leaving you to clean up the mess. With proactive fraud alert protection you are being informed before or as it is happening and you have the option to deny the requested approval. This is no small matter as it will protect you from the agonizing, emotionally draining process of restoring your credit and good name. It can also lead to the arrests of the creeps who are perpetrating this horrible crime.
We also have some concerns with the credit bureaus, Equifax, Transunion or Experian being your “Identity Protectors” as their primary source of revenue is from selling your information, most notably for pre-approved credit cards and insurance offers, and it is a bit contradictory that they are viewed as a possible solution for identity protection. That being said they each offer credit monitoring services the best of which we will list below.
For $12.95/month the Equifax Credit Watch service will monitor your credit at all three bureaus notifying you daily of any changes, plus give you a free 3 bureau credit report, unlimited access to you Equifax credit report and $20,000 of Identity fraud coverage. Though this is the best service from a credit bureau it is not the best credit monitoring service. That distinction belongs to Identity Guard, an identity protection company who offers 3 bureau credit monitoring with credit scores and includes internet and database scanning that is so effective the overall service rivals the industry leader LifeLock. Here is an Identity Guard Review. The best value credit monitoring is from Experian who with there Triple Alert service will monitor your report daily at all three bureaus and include $10,000 of identity theft insurance for $4.95 a month. Compare credit monitoring services here.
In comparison Identity Protection Companies offer identity theft insurance up to $1,000,000, a yearly 3 bureau credit report, identity restoration services, pre-authorized credit card and junk mail removal, scanning of black market internet and database sites that sell your personal information such as credit card and social security numbers and 3 bureau fraud alert setup and renewals.
Identity Protection services are preferable to credit monitoring in our opinion. Here are our reviews of LifeLock, Trusted ID and Debix.
One has to remember that both offerings, fraud alerts and credit monitoring, are viable options as long as you are aware of what you are getting. Monitoring your credit at one bureau is not going to inform you every time your credit has been used by an identity thief, it will only inform you if the creditor went through the specific bureau you signed up with. So if you choose credit monitoring ensure that you pick an offer that monitors your credit at all three bureaus.
Fraud alerts will stop a strong majority of identity thieves in their tracks, but not all of them. Sure your Bank will call, as required when they see the fraud alert, but do you really think an owner of a business who has ties to an organized identity theft crime ring is going to call. It is important to realize that no full proof method exists to stop identity theft and there will probably never be one. This is why an identity theft insurance policy is of great importance and is highly recommended by Identity Theft Labs regardless of your choice of credit protection companies.
$20,000 worth of identity insurance is probably enough to cover most identity theft cases but we recommend that you significantly reduce the chances of having to use an insurance policy by utilizing fraud alerts. The additional coverage provided by fraud alert companies adds to ones peace of mind and when lawyers and private investigators become involved in an identity restoration case its not hard to see how $20,000 can get eaten up quickly.
With over 217 million personal and private records being compromised in the last three years we can’t stress enough how important it is for you to have an identity protection plan in place. How you protect yourself from identity theft is and always has been your choice but we do implore you to do something, anything before you too become another stat like the 10 million identity theft victims in 2007.