Does Credit Monitoring Prevent Identity Theft?

by Rick Kam

Credit monitoring is an important tool in today's fight against identity theft. Many individuals subscribe to a service provided by all three of the major credit bureaus and their affiliates.

Is this an effective tool that prevents identity theft?

Unfortunately, the answer is no. Credit monitoring provides a useful tool to determine if there is an unauthorized change to your credit profile which may indicate misuse by an identity thief.

It does not prevent an identity thief from setting up fraudulent credit lines, changing your address, getting a job in your name, declaring bankruptcy, or committing crimes that become part of your records. All monitoring services will send you an alert when they detect a change to your credit profile. Only you can determine if that change was one you initiated or not. The assumption is if you didn't do it, you may be a victim of identity theft.

There are a couple of other drawbacks to credit monitoring. The first is it does not monitor other types of accounts for potential fraudulent activity. For example, it does not monitor your checking account. Many forms of identity theft go undetected (see my related posting on Lifelock). The other drawback is if you believe there is misuse of your personal information, all of the services provided by credit bureaus make you fix this yourself. Although many offer assistance ---this really translates to "do it yourself". The other issue is that it reports changes to your credit profile as opposed to being an early detection tool of identity theft.

So while credit monitoring is not perfect, it is one of the most prevalent tools consumers use today to protect themselves from ID theft.

You might ask, are there better tools on the horizon? Stay tuned for my next post on Identity monitoring.