What’s the difference between identity theft protection, credit monitoring and credit protection?
Keeping your ID secure will help you to avoid identity theft and fraud. But what is the best way to do this? Several banks, credit agencies, and other financial institutions offer protection and monitoring services. But what do they do? What is the difference between credit protection and ID theft protection, and should you also consider a credit tracker?
Here, we look at protection and monitoring services to help you decide what you need to protect your banking accounts.
What is identity theft protection?
Identity theft, as you should know, is potentially devastating to your finances and even the rest of your life. It’s the first step of ID fraud, which is why protection is so important.
So, identity theft protection is the monitoring of your data for suspicious or unusual transactions, credit applications, etc. While it’s an activity you can perform yourself for free, various identity theft protection services are available.
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?
Like identity theft protection and credit monitoring, credit protection is concerned with maintaining the health of your credit. This offers a more specific suite of services, however.
If you opt for credit protection, you can expect the benefit of systems and tools to prevent identity theft and receive alerts on new or unexpected items on your credit report. Credit protection also cancels lost or stolen credit cards without fuss, and in general prevents your credit score being hit by unauthorised activity.
While an automated service, credit protection is increasingly being offered as part of bundled bank accounts and credit cards. As such, you may not need to sign up to a third party offering this service – you could be already paying for it.
Check your existing credit package agreement to confirm.
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 might apply for a loan or mortgage with some confidence.
However, these tools can also be used to 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, they can also serve to highlight potential identity theft.
The takeaway from this is that if you are in the process of rebuilding your credit and you’re 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 do 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. Encompassing the ID protection, credit monitoring, credit protection, and tracker services outlined above, identity theft insurance is available from several providers. 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.
This is a precaution you can take to safeguard your identity, credit, and finances. Basically, if you’re hit by identity fraud, identity theft insurance will be activated.
What happens next? Well, your credit will be frozen. Cards will be cancelled and reissued to you. Any stolen credit will be refunded to you. Loans taken without your knowledge will be cancelled and the insurance will cover the costs associated. In some cases, identity theft insurance will also cover legal fees in the event of ID fraud-related action being 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.
ID fraud can affect anyone. The chances are you’ve already had at least one item of data stolen. Mitigating the risk of a thief using your stolen ID for profit is your best defence. 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, and 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.