Credit Monitoring Services v/s Identity Theft Insurance

There has been a great upsurge in the popularity of credit monitoring due to a great increase in identity theft cases. So, unlike before, when ID theft insurance and credit monitoring services were considered to be frugal and just a way to make more money for credit companies, you now have some valid reasons why these services are all the most important in the present scenario.

This guide will help you choose if Id theft insurance is a better option or if you should pick credit monitoring services only. Let us find out which one is better for you?

Identity Theft Insurance v/s Credit monitoring service

The protection of ID theft insurance came into existence when cases of identity theft increased. These plans promise to protect you from the hassles of identity theft that includes the cost and the process of recreating your credit. A credit monitoring service on the other hand reports the theft to one of the three credit bureaus and notifies you if there are any changes in your credit report.

Identity theft insurance - Why not?

Most of the consumer experts do not recommend identity theft insurance as it does not cover the losses borne by you. It only cleans up the mess of the theft. Some of the programs pay minimum amount if wages have been stolen but they do not pay completely.

There is a cap that may or may not cover your loss. Also since the thief is known to the victim, the insurance company does not pay. You get no protection and have to bear the losses.

Don’t be a victim of Identity theft

Take precautions to protect your identity. Keep your Personal data and identity details a secret from every one. Never divulge details like social security number and your passwords et al. Use e-mail instead of snail mail to receive or send your personal information.

The main reason why your email could be hacked is to gain access to the pre-approved card offers that companies send from time to time. Get your name removed from such mailing lists and prevent your mail from getting hacked.

Credit Monitoring Service – Services provided

A credit monitoring service, on the other hand offers you a variety of services that include notification when there are changes in your credit report as given below.

1. New accounts – Whenever a new account is opened by you or anyone else using your personal details, you will be notified about it immediately.
2. Inquiries – When your credit report is pulled by creditors or companies, you will come to know about it.
3. Activity in your credit file - Your credit report is updated periodically by the bureaus. If there are changes that are not authorized by you, you will be informed about it.
4. Change of address and employment is notified without your knowledge.

Choose the right credit monitoring service

Though, you can monitor your credit yourself, it is better you hire a company so that the monitoring is constant. However, you have to hire the correct company that will be beneficial to you. Remember that these services offer only monitoring of credit report from once company and if you wish for monitoring of all the three reports, you will have to make a special request and pay extra charges for it. The frequency of reviewing report is not as regular as you are led to believe.

Cons of a credit Monitoring service

Such a service can be good if they have enough information about your credit report and personal data. However, they do not have it so their monitoring is not effective.Another reason why it is not effective is that, the three credit bureaus do not have the same information. They miss notifying you about a lot of information that is looked at by lenders and creditors.Monitor your credit manually from time to time to prevent identity theft.

Since the reporting of data like payment of outstanding debts or delinquent loans et al are reported very late, the company cannot update it s records. As a result, what you see is an old report but the fact that you have bought a service to monitor your credit lulls you falsely into security.

The best way is to monitor your credit yourself.

Monitoring your credit yourself

Review your report at least 2 times in a year, if not every month.

You are the best person to monitoring your credit as you know the expenses you have made and the accounts et al that have been opened. Also, since you are taking precaution against identity theft, you will monitor it regularly. To do so, check your credit report periodically and review them so that you are aware of the changes in your report.