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Credit Monitoring vs. Credit Freezes: Which Offers More Protection?

Credit Monitoring vs. Credit Freezes: Which Offers More Protection?

Unfortunately, theft is incredibly common, especially when it comes to your personal information. According to Experian, there were 1,579 data breaches in 2017, exposing nearly 179 million records, including Social Security numbers and credit card numbers.

If you’re worried about identity theft, it’s essential that you take measures to protect your credit. Two options to consider are credit monitoring and placing a credit freeze on your accounts. While both approaches offer extra security, they’re not interchangeable and they each have their own drawbacks and benefits.

What is Credit Monitoring?

Not everyone has time to monitor their credit reports manually. That’s where credit monitoring services come in. These services send you an alert when there are changes to your credit report, such as opening a new account or increasing your credit limit.

These alerts can help you catch problems early on, before thieves can open up credit cards or take out loans in your name and rack up debt. If you do see any significant changes, you can take this as a signal of fraud and take action, such as disputing charges or closing accounts.

While credit monitoring services can be useful, they don’t prevent fraudulent activity from happening; they only alert you to problems. It’s up to you to act on those alerts.

While there are some free services available, most credit monitoring services charge a fee, and they can be expensive. For example, Experian’s monitoring service IdentityWorks is $19.99 per month.

What is a Credit Freeze?

If you think your information has been compromised, it may be a good idea to place a credit freeze on your account. A credit freeze is a more restrictive option than credit monitoring. With a credit freeze, you restrict access to your credit report.

Creditors and lenders can’t access your report. Because they need to view it to determine your eligibility for credit cards or loans, limiting access to your report prevents new accounts from being opened in your name.

A credit freeze doesn’t affect your credit score, and you can still access your personal credit report. However, a credit freeze only stops thieves from opening new accounts; they can still use your current credit cards or other information to rack up charges.

In addition, credit freezes have some downsides. If you’re applying for an apartment, a new job, or plan on opening a new credit card, you’ll have to remove the credit freeze before you can be approved. Removing a credit freeze can take several days, so it can delay your plans.

Unlike credit monitoring services, placing a credit freeze on your credit report is completely free. You can put a freeze on your account online through each credit bureau, or by calling each credit bureau directly.

When to Use Each Option

Credit monitoring and credit freezes have their advantages. But if your information has been compromised in a data breach or your personal data stolen, opting for a credit freeze makes more sense than simply signing up for a credit monitoring service.

A credit freeze actually prevents people from opening up new accounts in your name, so you don’t have to worry about thieves buying cars or opening credit cards with your information. While it’s more of a hassle to lift a credit freeze, it’s well worth the extra effort for the added protection.

Credit monitoring is a good idea if you aren’t the victim of identity theft and simply want to safeguard your account. If you’re willing to pay the fee, you can catch problems early on, preventing them from getting worse.

Protecting Your Credit Report

Your credit report plays a major role in your financial life. Take measures to protect your data to ensure that your information can’t be stolen. To get started, review your credit report throughout the year. You can access a credit report from each of the three credit bureaus for free once a year at AnnualCreditReport.com.

Not sure where you stand? You can get your credit score for free through CreditSoup.

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