Credit Monitoring vs Credit Freeze; What Is the Best for You?

Those who were victims of the massive Office of Personnel Management (OPM) breach of last year (21.5 million as of September 2015) were given the option of signing up for free credit monitoring services for a period of time; up to three years from the date of signup. Other companies who experience a data breach often offer up this service to victims. However, what does that really mean and is credit monitoring going to prevent identity theft?

The short answer is “no.” Credit monitoring and identity theft protection services (the term the OPM used to offer the service to its victims) will send an alert if credit is accessed, applied for, or an account is opened. In some cases, if identity theft does occur it will help you through the process of correcting it. It will not prevent any of this from happening.

On the other hand, a credit freeze will. It blocks any attempt to access credit and the credit bureaus will alert you if someone tries. A credit freeze is recommended to those who have had their social security numbers stolen and who are not applying for credit in the near term. For those who are planning to apply for a mortgage, credit card, car loan, etc., this may not be the right solution. Apply for the credit first, then put the freeze on the account.

That said, a credit freeze may be lifted and re-implemented if needed. Just make sure to check the fine print to find out how much lead time is needed to do this and if additional costs are involved. In some states, the bureaus are allowed to charge for freezing credit. However, it’s a relatively small cost and should be considered peace of mind.

An important detail about taking advantage of any credit monitoring service is that if there already is a freeze on your credit, the credit monitoring services will not work. This is because they need to access your credit so they can monitor it. Therefore, if you do sign up for this (and you should if you are offered it and want to keep your files accessible), sign up for the service first, then freeze your credit. Also, if you have already been an identity theft victim, these services can help you put your credit back together. However, don’t unfreeze it just to sign up. If the third party cannot access your file because it’s frozen, then the credit freeze is doing what it is supposed to do.

Don’t forget to monitor the credit of your children. Theoretically, children under 18 should not have a credit report. The reality is that one in 40 families with children under 18 had at least one child whose information was accessed in an unauthorized manner (from a 2012 study by the Identity Theft Assistance Center and the Javelin Strategy & Research group). If you find a report for your child on file with Equifax, Experian, or TransUnion, it means one of the following:
•A parent or guardian applied for credit with the minor’s social security number and it was approved,
•Someone used the minor’s information to get credit fraudulently, or
•The minor was listed as an authorized user or joint account holder on a credit account.

Unfortunately, the child victims of identity theft often know the thieves; 27% as reported in the aforementioned study. This makes it even more challenging for young victims to report it.

The company that the OPM is paying $133 million dollars to monitor the credit of its victims, requests more information than is needed to do the job. They recommend that bank account numbers, credit card numbers, passport details, medical information, and other sensitive information be entered into their forms so that they can watch over that too. However, even if they monitor all of that, it will not prevent identity theft and in fact, gives over a lot of very important information to yet another party leaving oneself open to even more risk of it being stolen. After all, the more that have it, the more risk of it being accessed by an unauthorized party.

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