In 2019, Javelin Strategy & Research reported that there were 14.4 million victims of identity fraud just in the U.S.
The prospect of your identity being stolen is a scary one, and if you’re not familiar with how credit reports work, you can be tempted to pay for a credit monitoring service. But are they really worth it? In short, they do provide a benefit, but it’s worth noting that nearly everything an identity theft protection service offers, you can do on your own.
For many people though, it’s worth the cost simply knowing someone else is watching out for their sensitive information. Or perhaps you find yourself juggling work deadlines, soccer practice, and school projects all at once, so you may find peace of mind that someone else is paying attention. If you’re considering identity theft protection, here’s everything you need to know.
How Identity Theft Protection Works
Identity protection services promise to keep an eye on your credit report and financial information for a monthly or yearly fee. But there’s one very important thing to be aware of: these services are primarily designed to alert you to something after it’s happened or to help you recover from theft, not always to actively prevent it from happening.
Identity theft protection services:
- Monitor your credit
- Look for unauthorized use of your personal information
- Alert you to potential threats to your identity
- Scan multiple devices and continuously update your protection software
- Work with you to restore your identity if it is stolen
On the monitoring and alert front, these companies will watch your credit report for any new accounts or inquiries. This is easily the most useful feature of the service, as many identity theft victims don’t know anything is wrong until their accounts are emptied and they have multiple new lines of credit in their name. When it comes to recovery, these companies help customers actually get their money back and repair any damage to their credit.
Choosing the Best Identity Theft Protection Service
If you decide you want to use an identity theft protection service, make sure it offers credit monitoring and identity theft monitoring. Reputable identity theft protection services typically offer both.
You’ll want to avoid credit monitoring from one of the “big three” agencies. Some of these services only monitor one agency (which is almost useless), some have less coverage than outside services, and some actually limit your ability to sue if your data is exposed, as we recently saw with the Equifax breach.
Some of the most trusted, most popular identity protection services are Lifelock, IdentityForce, and ID Watchdog. You may find a different provider that suits you better. Make sure the service you use goes beyond just checking your credit report though. You’ll want the identity theft service to monitor for payday loan sites, court records, change of address databases, and dark web sites as well.
The Best Alternative to Identity Theft Protection
If you don’t want to pay to make sure your financial information is secure, there is one major step you can do on your own — freeze your credit.
Each of the major credit reporting services (Experian, TransUnion, Equifax) allow customers to place a freeze on their credit at no charge and at no damage to their credit score. While this freeze is in place, no new lines of credit can be opened. A freeze can be undone at any time, and both freezing and thawing out are often as simple as logging on to the individual website for each agency.
Eighty-five percent of identity fraud involves the use of a current account, so freezing your credit isn’t a foolproof method. But if you don’t plan on opening new credit anytime soon, it’s a choice you should probably make. And given the ease of reversing the choice (it takes just a few minutes and takes effect immediately), it’s not a bad idea to freeze your credit even if you think you may be opening new accounts.
Who Should Purchase Identity Theft Protection?
While they may not be right for everyone, identity theft protection services are legitimate companies and provide a valuable service to millions of people. There are many people who would benefit from paying for credit monitoring — people who have already had their identity stolen at one point, people who had their data exposed in a breach, and people who know they won’t take the time to monitor their credit on their own. Whatever you decide, it’s a good idea to know what to do if you discover your identity has been stolen.