Credit Monitoring Services - Do You Need Them?
Nowadays, it is essential that you maintain a good credit rating if you wish to secure credit now and in the future. One important factor in achieving this is to ensure you do not become the victim of identity theft or fraud.
This is happens when a criminal steals your personal and financial details, applies for credit cards in your name and proceeds to spend on that card.
As more and more people use credit the cases of ID theft has been on the rise in the last couple if years. This increase has also seen the market for credit monitoring services increase as well. These services are being provided to consumer by the big three credit bureaus, banks and third party specialist services.
What Can Credit Monitoring Services Provide You
The key selling point credit monitoring services promote is that they can save you the time and effort involved in monitoring identity theft and therefore, reduce the risk of your credit file being compromised through fraudulent activities.
These credit report monitoring services are not free as they are commonly offering monthly membership fees that cost between $10 and $50 depending on the level of service you choose.
For this price credit monitoring services usually offer 24 hour access to your credit report and score and if any suspicious activity is flagged up you will be notified by email or text. The key factor to point out is that these services do not exactly prevent you from becoming a victim of identity fraud. What it does is alert you sooner that fraud has been committed and this early warning system can limit the damage.
Due to the inadequacies of credit report monitoring a new type of service that is being offered is ID fraud prevention and detection. This service provides more cover in that it also encompasses the monitoring of other avenues where ID theft and fraud can take place. For example, this can involve the surveillance of internet forums, chat rooms, public records and social security fraud.
Weaknesses In The Service
- Lack of credit report coverage
Although, these kind of services can offer a certain degree of comfort and security they are not totally fool proof. Credit monitoring does have its weaknesses in that of these services only provide surveillance on one method that criminals can use to run off with your identity.
There are three credit reports produced by the main bureaus TransUnion, Equifax and Experian may only cover their credit file on you. This means the other bureaus data files remained unchecked. Therefore, if any fraudulent activity takes place in those data files that are not covered the fraud will nit be picked up. Another loop hole is that some of these services ignore dormant or unused accounts.
- Theft of social security number
However, one of the most common ways to commit identity fraud is through the theft of peoples social security number. For example, a criminal can use a different name and a different social security number to open a fraudulent account.
As credit linked to peoples social security number (SSN) is not automatically updated on the credit files held with the credit agencies there can be a delay before you find out that someone has used your SSN to open a fraudulent account. In this way it can be very difficult for monitoring services to detect this.
This type of ID insurance is a popular service that is promoted through the credit bureaus and specialist monitoring companies. The key aim of this type of protection is to offer you the peace of mind as it can refund you for lost earnings during the period that you needed to take time off work to investigate and dispute the fraud.
Certain insurance products also claim to cover you for legal fees including other expense such as phone calls and paper work. Although, these may offer a certain level of protection from fraud it is always important to check the small print of any insurance offer.
It has been found that certain ID theft insurance has certain loopholes. One particularly loophole is that certain polices do not cover you for fraud carried out before you bought the insurance policy.
If you take into consideration what was mentioned earlier, the fraudulent activities committed by identity thieves can take weeks, months and even years to come to the surface. In this case certain policies may not cover you.
Conclusion
Credit monitoring services can save you time and limit the risk of you becoming a victim of identity theft and fraud. However, there is misconception surrounding these companies that they can protect you and in reality they cannot. A large part of the benefit is the time saving element and the convenience of having access to your credit reports. Most of the services they provide you can do yourself at no to low cost. However, time is money and if they can save you time then, based on your needs and circumstances, they may be worth further investigation.
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