Why Credit Monitoring Won’t Protect Your Identity from Being Stolen

Keeping your personal information out of the hands of people with bad intentions is, unfortunately, not possible in the current digital age. Large scale data breaches have occurred with regularity, and likely will continue. It’s the reality of the world in which we now live.

We don’t do ourselves any favors in this regard, considering how much of our own personal information we choose to give away or post online. How many of us have our date of birth on our Facebook profiles just to get all of those “likes” and “happy birthday” comments?

Over 11.5 billion (yes, that’s billion, with a “b”) records have been exposed as a result of data breaches since 2005, according to PrivacyRights.org. Unless you’ve lived off the grid for your entire adult life, your information has already been exposed, maybe multiple times.

The news gets worse before it gets better. Not only is there nothing you can do to completely protect your personal information, there’s no service you can buy to keep your data 100% safe either, a fact which is confirmed by the Federal Trade Commission.

While these facts are unsettling, that doesn’t mean you should throw up your hands and say, “Oh well. What happens, happens.” You can still take smart steps to protect yourself and limit the potential for damage if your personal information ever becomes compromised.

Credit Monitoring

Credit monitoring services passively track the information on your credit reports and notify you of changes that might be indicative of fraud, like the opening of a new account. Credit monitoring is a solution often marketed as “identity theft protection.” That’s not really 100% accurate, as credit monitoring won’t prevent identity theft, and certainly won’t protect you from it.

Credit monitoring is a reactive strategy. It’s designed to alert you, as quickly as possible, that a problem has already occurred. But credit monitoring won’t do anything to protect your identity or your credit information on the front end of the identity theft curve.

It’s also worth noting that credit monitoring doesn’t track every type of identity theft. For example, credit monitoring can’t detect:

Unauthorized withdrawals or charges on current accounts.
Fraudulent tax returns filed in your name.
Government benefits fraudulently claimed in your name.
Fraudulent use of your personal information to open utility accounts.
Fraudulent use of your personal information on employment records.
Fraudulent use of your personal information on arrest or court records.
Fraudulent payday loan or cash advance applications.
Illegal access of your information on any third-party database not owned by the credit bureaus.

Even though credit monitoring has limitations, it is not without value. You need to regularly keep an eye on all three of your three credit reports. A free or fee-based credit monitoring service can help you to do so.

But keep in mind that monitoring services simply let you know something may have already happened. Then, it’s up to you to fix it.

Credit Freezes or Security Freezes

A credit freeze, often called a security freeze, offers a more proactive approach to preventing some types of identity theft. For example, if a thief manages to get his hands on your Social Security number, a credit freeze could severely limit what can be done with your stolen information.

When you freeze your three credit reports, they are essentially taken out of circulation. This means lenders with whom you do not already have a relationship cannot access your credit information if a thief submits a fraudulent application in your name. The result will be a denial of any unauthorized applications.

After freezing your credit, should you want to apply for credit yourself, you simply “thaw” your reports beforehand. This puts them back into circulation and allows for legitimate access. Once your application has been approved, you simply re-freeze them. There is no cost for any of this.

Keep in mind, even a credit freeze cannot protect you from all types of identity theft, nor can it prevent your data from being stolen. A freeze, however, is a wise move to protect yourself and your credit reports from true name credit fraud.

Do Something… Anything

The fact that you have an identity will always make you a target. There’s simply nothing you can do about it. And even after you die, your information still has value to a thief. On top of that, fraudsters will in some cases actually create a person out of thin air and defraud that fake entity. This is the so-called synthetic identity theft.

Just because there’s no way to fully protect yourself from identity theft doesn’t mean you shouldn’t do what you can to protect yourself. Being vigilant when it comes to your credit is a great start.

Make a habit of checking your three credit reports frequently for errors, either on your own or through a credit monitoring service. A credit freeze can offer an added layer of protection, but it shouldn’t be an excuse to get lazy about watching your reports for fraud and errors.

More by John Ulzheimer:

John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. The author of four books on the subject, Ulzheimer has been featured thousands of times over the past decade in media outlets including the Wall Street Journal, NBC Nightly News, The Los Angeles Times, CNBC, and countless others. With professional experience at both Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

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