Credit Monitoring vs. Security Freeze: Which Is Better?

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Have you been searching for ways to protect your precious credit that you’ve worked so hard to build, as well as protect your identity from hackers? If so, you’ve probably read about both credit monitoring and security freezes.

That’s particularly true if your credit card information was stolen in one of the major security breaches we’ve read so much about recently. Perhaps Target or some other retailer has offered you a year of free credit monitoring.

Wondering which route you should take? Let’s take a closer look at each of the services and what they entail.

What is credit monitoring?

Credit monitoring is a daily tracking mechanism that immediately alerts you if any activity takes place in your credit files, such as untimely payments, credit limit changes, credit inquiries and the opening of new accounts. At the end of each month or quarter, depending on the service provider, you will receive an activity summary electronically or via snail mail.

The service is reactive in nature because it does not shield you from identity theft. Instead, it operates like a security alarm on your vehicle. You are made aware of the breach once the burglar is already inside and ready to take your wheels for a spin or to the nearest chop shop.

Another important factor to consider is the cost, unless you’ve gotten an offer of free monitoring from a business that’s been hacked. Credit monitoring ranges anywhere from $10 to $15 a month, and not all providers are created equal. Some only offer monitoring of one of the three major credit bureaus.

Even worse, some are not accredited by the Better Business Bureau or appear to be fly-by-night organizations that make inflated promises to customers. You’ll want to thoroughly research the reputation of a business before you sign up.

What is a security freeze?

By placing a security freeze on your credit profile, you will hinder the establishment of new accounts in your name and thwart the efforts of identity thieves. It prohibits third-party access to your credit reports, with a few exceptions, and remains intact until you decide to lift it.

Keep in mind that it does nothing to mitigate damage sustained by accounts that have already been compromised.

To place, lift or remove a security freeze on your credit profile, you will spend anywhere from $3 to $12, unless you are a victim of identity theft and can substantiate your claim with a police report. In that case, those services will be provided free of charge.

Although it seems like a great way to lock down your credit profile, security freezes can be a hassle if you misplace the initial PIN that is needed to unlock your report. And even if you have the magic code in tow, it can take up to three business days for your credit report to be liberated.

Which option is right for you?

The answer to this question depends on your unique situation. Before taking either route, here are a few questions to consider:

  • Were you recently victimized by identity theft?
  • Is your personal information at risk due to a security breach?
  • Are you a victim of mail fraud?
  • Do you plan to apply for new credit in the near future?

Assuming your identity has been stolen, it’s probably not a bad idea to place a freeze in order to prevent future occurrences from taking place.

However, if you do plan to apply for credit in the near future, hold off on the freeze and take the monitoring route or the approval process will be delayed.

A feasible alternative

Another option is to place a fraud alert on your credit profile. I like to think of it as the middle ground between credit monitoring and a security freeze. It doesn’t completely lock down your credit profile. Instead, it alerts lenders to verify your identity before evaluating your credit report and issuing a decision about new accounts.

To place a fraud alert, notify one of the three credit bureaus. They will immediately notify the others, and the fraud alert will remain intact for 90 days.

Have you taken any of these measures to protect your credit? Let us know in the comments below or on our Facebook page.

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