Should you get Identity Theft Insurance or Credit Monitoring Services

You may have recently read that a Department of Veterans affairs computer that contained the personal information and social security numbers of thousands of veterans was stolen. If you do some research, you will find that colleges, major stores, banks and even a security firm or two have had their computers hacked and information stolen. Why is that important? You don’t need much to steal someone’s identity. With a person’s full name, birth date and social security number, you can apply for and get credit cards, car loans, get utility services, open bank accounts.

Your identity and your credit history are vulnerable. You probably get numerous offers for identity theft insurance and credit monitoring services in both email and regular mail. Before you throw them out or delete them, let’s take a look at what they offer.

Identity theft insurance will not pay the direct costs of getting your credit restored. It will not pay off unauthorized charges. It may pay for legal fees and time off work to get the issue resolved but most likely it will just pay for expenses like phone calls, copy or fax costs or postage. Most of these policies also have a deductible. Consumer Reports Magazine states that this is insurance that you should not buy.

Credit Monitoring Services are another option. These services promise to alert you when there is negative activity on your credit. A friend of mine who is very credit savvy subscribes to one of these and was recently notified that several credit accounts had been opened in his name. He checked with the credit bureaus and found that three charge accounts had been opened in his name and using his personal information.

The monitoring service doesn’t correct these issues and he spent a few frustrating hours on the phone getting them resolved but they were removed from his credit report the same day. The accounts were closed and quick action kept it from having a negative effect on his credit rating.

All three of the major credit bureaus, Equifax, Experian and TransUnion offer credit monitoring and it may be a wise choice to pay for it at one of the three. In fact, Experian monitors all three bureaus for negative changes and costs $39.95 per year. If you choose not to pay for a credit monitoring service you would still be wise to check your credit report frequently. You are entitled to one free credit report every year and these can be obtained from any and all of the credit bureaus.

Prevention is the best and cheapest option. Be cautious about using your social security number and card for identification. If you put it on your checks, a thief already has your full name, address and social security number, not to mention your account number and bank. Also be cautious when giving personal information online and make sure that there is some type of security certification such as VeriSign or Entrust that require websites to protect your information.