Credit Monitoring Vs. Identity Theft Protection – What’s The Difference?

Credit checking and identity theft protection are two services that are often confused because they both monitor your credit reports. However, they accomplish this task in different ways. Understanding the difference between the two is essential to making the best choice for your needs. They are both services that help protect you from identity theft. Monitoring your credit involves a company alerting you to changes in your everyday usage, credit rating, etc. On the other hand, identity protection helps prevent fraudulent activity on your credit card or bank accounts and tracks any changes in those accounts. But what’s the difference between these two types of fraud protection, and who should choose one over the other?

What Is Credit Management?

Credit checking looks at your credit score, how much activity you do, and what is going on with your finances. It also lets you know when there are any changes in your score to give you a heads up about potential problems. In the digital era, where people spend their time on social media and apps, it is common to see people getting into debt. Without proper knowledge of what is going on with their finances, they can get into a lot of trouble. Individuals can establish control over their spending habits to avoid ending up in too deep of a hole by using a credit monitoring service. It has become an essential tool for consumers who find themselves missing financial information from credit cards or other sources. It allows users to stay informed about their credit status and make necessary changes.

How Does It Work?

It is essentially a method of detecting credit card fraud or identity theft and involves looking for patterns in the usage of an account. Monitoring can be utilized by consumers or businesses to detect and monitor their credit card usage patterns, check their accounts when they are not physically present, and prevent fraud. The monitoring system alerts users when suspicious activity takes place in their accounts. This includes purchases made on the Internet with a different billing address than the billing address on file, buying goods online with a different shipping address than the one on file, or using an ATM that has been reported as fraudulent in recent days.

It is mainly used by people who have been victims of fraud, identity theft, or even just to monitor their own spending. The system uses various techniques such as credit scoring, credit history, and monitoring alerts to identify entities that have gained access to your personal information by impersonating you. Monitoring tools have been around for quite some time. However, the tools have recently gained more popularity due to their ability to assess your financial history and help manage debt. The most popular tools analyze credit accounts such as those with cards or loans from different banks or institutions such as rent, utilities, mortgage, etc. Some of the common types of data that are analyzed are:

  • Credit card purchases: Patterns and uses will be picked up and analyzed to see any discrepancies between your everyday usage and what is happening. If it sees something suspicious, it will usually send an alert to warn you about what is occurring.
  • Payments: In some cases, thieves will use your credit card to pay off their own obligations. In this case, you will receive an alert asking you if you have set up a new payment.
  • Bank account balances: Many people want to know if their bank balance is approaching a designation amount. If so, they can get informed that they are nearing that amount soon and should take action if required.
  • Credit report: Your credit report can make getting out loans easier or more challenging depending on your rating. Therefore, getting notified if your rating has decreased or increased is worthwhile.

What Is Identity Theft Protection?

Identity theft is a serious threat and can ruin your life if you don’t take the necessary precautions to protect yourself. Identity theft services go one step beyond what a typical monitoring service can provide. Identity theft protection services are vital for protecting yourself from identity theft. They help you monitor your financial transactions, credit reports, and tax filings for signs of fraud or other irregularities. Identity theft occurs when someone uses another person’s personally identifiable information, or PII, to commit fraud or other crimes. 

Personal information is any data used to identify an individual, whether collected directly from the individual or acquired from a third party like credit bureaus or social media websites. Identity theft protection services often include monitoring your credit report, and they can also include monitoring your health insurance and banking activity. In some cases, you can even get identity theft insurance designed to cover some or all of the costs associated with having your ID stolen. These services do not verify the validity of claims made by identity thieves, but they do alert you when they are made and provide you with advice on how to take preventative measures. The primary services typically include:

  • Coverage for ID theft
  • Monitoring of personal information
  • Monitoring of Social Security numbers
  • Monitoring changes of address
  • Monitoring of court records
  • Monitoring of non-credit loans
  • Updates on data breaches
  • Notifications of new credit cards and bank accounts

Who Needs These Services?

When it comes to credit management, almost everyone can benefit somehow. As previously mentioned, it can cover a range of things, from your credit score to analyzing spending patterns that seem unusual. It is a similar situation regarding identity theft protection services. Identity theft is a big problem in today’s society, with millions of people affected each year. With the right identity protection service, you can eliminate a lot of the stress that comes along with this type of situation. Everyone should be cautious about their online accounts and digital devices because the risk for identity theft is high. Identity protection is highly recommended for all people to avoid being scammed and having their ID stolen.

If you’re concerned about identity theft, you must be diligent and proactive. Identity theft protection is good, but it doesn’t replace credit reporting. To truly protect against identity theft, you should have both services in place.

Credit Monitoring Vs. Identity Theft Protection – What’s The Difference? was last updated December 28th, 2021 by Allen Brown