Credit Monitoring vs. Identity Theft Protection: What's the Difference?
Sept. 15, 2017
Consider yourself fortunate if you've never been the victim of a data breach or identity theft. But given the increasing number of breaches—and victims—in recent years, don't be surprised if your luck runs out at some point.
If you’re considering taking action to help protect yourself, among the options are identity theft protection services and credit monitoring. So, what’s the difference? Well, it depends. When it comes to credit monitoring, you can take one of two approaches: doing it yourself or paying a company to do it for you. Identity theft protection can involve subscribing to a service.
DIY credit monitoring
If you choose the DIY (do-it-yourself) approach to credit monitoring, you have access to one free credit report per year from each of the three major credit reporting agencies (CRAs). If you stagger your requests—say, one every four months—you’re able to monitor your credit reports at no cost at different points over a 12-month period. Credit reports don’t include credit scores, but you may be able to obtain a free credit score through an existing credit card account.
Identity theft protection services are typically offered through a monthly or annual subscription, and they may include credit file monitoring at one or more of the three CRAs and, possibly, a credit score from one or more CRA. In addition, such services can alert you when your personally identifiable information (PII), such as your Social Security number or email address, is used in ways that may not show up on your credit report. Identity theft protection services may also offer restoration services, to help victims resolve various identity theft issues.
Here’s a quick overview of what can be monitored by each service. (Please note, services vary by provider.)
|Credit Monitoring||Identity Theft Protection Service|
|• Credit file activity at one, two or three CRAs||• Credit file activity at one, two or three CRAs|
|• Credit score||• Credit score|
|• Change of USPS mailing address requests|
|• Court or arrest records|
|• Orders for new utility, cable, and wireless services|
|• Payday loan applications|
|• Check-cashing requests|
|• Social media monitoring for PII exposure|
|• Monitoring of websites where criminals sell or trade stolen information|
Now that you have an overview of the differences, let’s take a deeper dive.
With major data breaches making headlines, many consumers are recognizing that credit card fraud or identity theft can happen to anyone. It can also be scary and confusing, making it of little surprise that more and more people are searching for help. Consumers enlist the help of credit monitoring or identity theft protection services but they may not know the difference.
What is identity theft?
Identity theft occurs when thieves steal your personal information, such as your name, birthdate, Social Security number or credit card information, to commit crimes. Identity thieves may use the information to open new accounts, buy cars, file fraudulent tax returns or commit other crimes in your name.
If you are considering paying for credit monitoring or identity theft protection and are unsure whether to sign up, here's what you need to know to help determine if either service could be beneficial for you.
Some consumers concerned about monitoring their credit score use a credit monitoring service—which could be free or paid. Credit monitoring can be particularly helpful for people who have lower credit scores and are working on improving them. Credit monitoring can also be useful for those interested in a service that monitors changes to one or more of their credit reports, especially when there are credit inquiries related to applications for a new credit card account or loan. People also can use credit monitoring to signal when someone else applies for an account in their name, though credit monitoring may not scan for fraudulent credit card charges.
When shopping around for a credit monitoring service, it's helpful to ask if the service tracks just one or all of your credit reports. Your credit reports, which collect all your credit data, are compiled by the three major CRAs, Experian, Equifax and TransUnion. These credit reports track your applications for new credit, your payment history and the amount of debt you have, among other things. Your three credit reports may be a little different, because not all of the financial institutions you do business with necessarily report back to all three of the major CRAs. Credit monitoring could alert you if a company checks your credit history or if a new credit card account or loan is opened in your name, among other things that directly affect your credit, according to the Federal Trade Commission (FTC).
Breached companies often provide credit monitoring as a complimentary service to help the individual victims monitor their credit report. Free service plans range in what they cover. These credit monitoring plans can be offered for a year or two, and may provide credit scores and/or reports from one or all three major credit bureaus. Depending on who’s affected by the breach, the free service can cover you or you and your dependent minor children. So, it’s important to read the details before signing up for any service to know exactly what you are getting.
Identity theft protection services
An identity theft protection service generally provides its customers with more than credit monitoring services.
While a free credit monitoring service may point out that there is activity on your credit report, an identity theft protection service could monitor for suspicious or fraudulent activity involving your identity via bank accounts, criminal databases, and other places your Social Security number is used. Such services sometimes also help fix the problem, should your identity be stolen. An identity theft protection service may also alert consumers whose personal information is spotted on the dark web because an identity thief is selling it.
You may find that these services are available to you through your bank or insurance company, often for an additional fee, or you can seek out an independent service.
If your identity is stolen, it could take months or even years to unravel the mess it creates. You can take steps on your own to fix it, or you can sign up for an identity theft protection service that offers restoration help.
If you become a victim of identity theft, there are many important steps to take, including filing a police report and placing an initial fraud alert on your credit by contacting one of the three main credit reporting agencies. A fraud alert tells potential lenders to reach out to you directly to verify the applicant’s identity before opening new accounts in your name, according to the FTC.
After you place an initial fraud alert, the credit reporting company will explain your rights and how you can get a copy of your credit report. Placing an initial fraud alert entitles you to a free credit report from each of the three credit reporting companies.
The FTC also suggests you consider contacting the credit reporting agencies to place a credit freeze on your credit file. A credit freeze means potential creditors cannot access your credit report, making it less likely an identity thief can open new accounts in your name. The cost to place and lift a freeze depends on state law. In many states, identity theft victims can place a freeze for free, but in others, victims must pay a fee, which is usually about $5 to $10.
If you're a victim of identity fraud
If you know which of your accounts have been tampered with, and you want to handle it on your own, consider doing the following:
- Contact the related businesses.
- Talk to someone in the fraud department, explain what has happened and ask what can be done to rectify the problem.
- Follow up in writing.
- Send your letters by certified mail and ask for a return receipt. That creates a record of your communications.
- File a police report. Also, create an identity theft report with the FTC.
When using an identity theft protection service, specialists can help you by making the calls, filing the paperwork and taking other steps to help restore your identity.
Equifax data breach
In the aftermath of the Equifax data breach, announced in September 2017, more people may be considering their identity theft protection options. After all, the credit monitoring agency says the personal information of approximately 143 million U.S. consumers was potentially impacted in the incident. And that information includes consumers’ names, Social Security numbers, birth dates, and addresses—data that could be used by thieves to steal the victims’ identities.
As part of its breach response, Equifax is offering consumers one year of a free service that includes credit file monitoring and others services. Keep in mind that once your personal information is breached, identity thieves may wait a year or more before using or selling it. You may want to consider additional services to help protect your identity beyond that free offer.
In the wake of such a large breach, some consumers may decide not to wait for their identities to be stolen before considering a credit freeze to, essentially, lock their credit. As noted earlier, this type of freeze may involve fees. They may also require some advance planning to "thaw" them if you need to open a new credit account or apply for a mortgage or other type of loan. Keep this in mind if you decide to go this route. Another option is a fraud alert, which tells potential lenders to verify the identity of anyone opening an account in your name. They’re free, but must be reinstated every 90 days in most cases. Also, note that neither a credit freeze nor a fraud alert will prevent all forms of identity theft—there are plenty of types that do not require a credit check. Also, credit freezes and alerts won’t prevent someone who gains access to your existing accounts from fraudulent activity.
Identity theft protection vs. credit monitoring: You decide
The bottom line is that if a company offers you free credit monitoring or identity theft protection and restoration services, it probably won’t hurt to take advantage of it. But that alone usually lasts one or two years and actual services may vary. Also, depending on the company you sign up with, you might be seeing credit alerts from only one of the three credit reporting agencies.
Unfortunately, when personal information like your Social Security number is exposed, an identity thief may have that information forever and may choose to wait more than a year or two to actually commit crimes in your name—understanding that people may, at that point, be less vigilant about trying to help protect their identities.
So, what’s the best choice for you—paying for identity theft protection or credit monitoring, or taking the DIY approach with credit monitoring? It depends. Credit monitoring services may not be enough to help protect your identity, and monitoring your credit on your own could miss certain threats to your identity. Identity theft protection services may even help you restore your identity, should you become a victim.
Editorial note: Our articles provide educational information for you. Norton LifeLock offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about cyber safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses.