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Credit Monitoring vs. Security Freeze: Which Should You Do?

Now more than ever, it is important to protect yourself from hackers. With the recent large scale security breaches at Target and other retailers, identity theft has hit home for many consumers. And those who were affected are probably looking into all the ways to protect their credit. 
Luckily, there are two major ways to prevent fraud from happening again: credit monitoring and security freezes. These will insure that your credit score is fully protected from fraudulent activity. But which one should you use? If you’re deciding between these two, take a close look at each of the services and what they entail.

Credit monitoring:

With credit monitoring, you can pay for a theft product and service that will protect you. By using one of these services, your credit will be tracked daily in all 3 major credit bureaus. It will immediately alert you if any activity takes place in your credit files, like the opening of new accounts, untimely payments, credit limit changes, or any credit inquiries. With credit monitoring, you will be able to know whenever fraudulent activity takes place on your account and immediately work to fix it. Many of these services also promise that you will receive loss reimbursement insurance and get your money back if it is stolen while using their service.
However, the problem with credit monitoring is that it is reactive in nature. You won’t know that someone has hacked you until they have hacked you. It operates like a security alarm, so you can then fix the breach immediately. But it does not shield you from identity theft itself. The other drawback to credit monitoring services is the cost. Many of these services start at $19.95 a month, and some only offer monitoring of one of the three major credit bureaus. It can end up being quite expensive for you to fully protect yourself. In addition, it is important to go through an accredited service, as there are many services claiming to be identity theft prevention and protection that are just trying to get your money.

Security freezes:

Unlike a credit monitoring service, a security freeze prevents identity theft by blocking access to information in your credit report. Security freezes, also known as credit freezes, are a preemptive way to insure that identity theft does not occur. It stops thieves from establishing new accounts in your name, so your credit is not hacked and your score damaged. It will stop lenders from having access to your credit reports, and it will remain intact until you lift the freeze. It does not affect your existing lines of credit, though, so you can continue to use your credit cards regularly. 
The main issue with security freezes is that they do not stop identity thieves from hacking your existing accounts. As freezing your credit does not stop the usage of your card, it only stops thieves from creating new accounts, not using old ones. You also have to pay a small fee for each bureau every time you want to thaw an account. So, if you are applying for a loan or credit card, you will have to pay $5- $10 for each report. It may also take up to 5 business days to thaw your report.

Which option is right for you?

The option that is right for you depends on your specific situation. It is important to ask yourself why you need identity theft protection before you decide what to do. That being said, if your identity has been recently stolen, it’s probably a good idea to place a freeze on your credit. This will insure that the hacker cannot use your information to open new accounts. But, if you plan to apply for credit in the near future, you probably want to hold off on the freeze and get a credit monitoring service instead.

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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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