Is credit monitoring enough to keep your identity safe?

Hugh Norton

Special to Village News

Identity theft can be a time-consuming and costly hassle, but there are measures people can take to protect their personal information and avoid the headache of recovering their identity. One tool that can help is credit monitoring. But what exactly does credit monitoring do? And more importantly, is it enough to keep an identity safe?

What is credit monitoring? There are three primary national consumer credit bureaus, and a consumer 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 the credit reports based on prior activity and send an alert if they detect an issue. These could include a new hard inquiry, such as when applying for credit and a creditor checks the report, or a new account. Either could be an indication that someone is using the information to fraudulently open financial accounts.

They may also send an alert to new public records, such as a bankruptcy, and to changes to the personal information section, such as a new name or address on the report.

Credit monitoring services can range in price and function. Basic monitoring and alert services can be found for free; however, they may only monitor one or two of the credit reports, so consumers could have to sign up for several to get full coverage.

Services that have a monthly or annual subscription fee may monitor 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 personal information. They may send an alert if personal information 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. An alert that someone has tried to use or successfully used a consumer’s personal information is in a sense too late – they’re already a victim of identity theft.

Being able to react right away, however, can help limit the damage because they can contact the companies to have the fraudulent accounts shut down. Additionally, there are steps they can take to help minimize the risk of identity theft.

Unless a consumer decides to live off the financial grid, they may not be able to completely protect themselves from large data breaches, but here are a few things they can do to help keep their personal information secure such as, not carrying a Social Security card in a wallet and only carrying other documents with sensitive information such as a Medicare card when they know they’ll need them.

Generally, consumers should not share personal information if they receive an incoming call, even if the person claims to be from the bank or a government agency. Instead, they should tell the caller they will call them back and use the entity’s actual number, which can usually be found on a bill, statement of account or website.

They should learn how to safely and properly dispose of computers, mobile phones and other electronics that may have personal information on them.

Placing fraud alerts or credit freezes on the reports will make it more difficult for someone else to open an account in their name.

Before throwing it out, shred or cut up material that has personal information, including old bank statements, credit cards and insurance forms.

Install anti-virus software on all computers and electronic devices and keep it up to date.

Avoid logging into financial accounts while using public Wi-Fi networks, including those at cafes or airports.

Set and regularly update the passwords for all phones and computers.

Use different, long passwords for online accounts.

The Federal Trade Commission also has helpful articles and resources that consumers can explore to learn more about identity theft prevention and recovery.

The bottom line is at a minimum, having some form of free credit monitoring or making a practice of regularly checking credit reports for suspicious changes could help consumers avoid major problems down the road. If someone is concerned about identity theft, taking steps to secure their 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, visit http://www.twitter.com/PracticalMoney.