The Frugal Creditnista

Credit Monitoring Guide: Everything You Need to Know to Protect Your Financial Data

Data breaches are happening at a record pace, and they show no signs of slowing. Last year alone nearly 1600 breaches were reported, exposing over 179 million records. Over 14 million credit card numbers were compromised, while 158 million social security numbers were exposed. 

Or to put another way, if each record stolen belonged to a different person, that’s more than ONE out of every TWO Americans who have had their financial or personal data exposed. 

Imagine having only a 50/50 shot of protecting your social security numbers, credit cards, health records, and identity from would-be attackers. Yet, this is the REALITY for over half of Americans!

I’ve gotten a lot of questions recently at The Frugal Creditnista about our own readers finding out their data has been exposed on the dark web. Let’s jump into some facts and options on how you can protect yourself, even after your financial information has entered the wrong hands.

What to Do if Credit Fraud Happens to You

Here’s the good news: banks, businesses, hospitals, and credit card companies are required by law to let you know if they’ve suffered a data breach that might affect you. 

The bad news? They don’t really tell you anything else other than someone MAY HAVE hijacked your data. They don’t tell you what those hackers are doing with your data or if they’re selling it on the dark web. And that feeling of unknowing can be scary!

The dark web is the place on the internet that most of us folks can’t access. The websites here are not indexed by search engines, and about half the content on the dark web is illegal or fraudulent. People sell all kinds of information, like social security numbers, credit card numbers, drugs, and stolen goods.

If you get a letter from a company saying they’ve been compromised or an email (like many in our TFC community) saying your data has been found on the dark web… Don’t Panic!

Here’s what you need to do if your financial data has been compromised:

First, let your credit card companies know you think your data may have been stolen. Most of them will work with you to monitor your spending, and will even get you new cards to avoid unauthorized purchases. Also, keep a check on your bank account and credit score and alert your financial partners immediately if you suspect an error. It pays to do your homework!

You might be inclined to investigate other services, such as a fraud alert, credit monitoring, or a credit freeze, that will do all these things for you. I’m laying out a few details on your options so you can make an informed decision for your finances:

Fraud Alert

Most of the emails my clients have received about their info being sold on the dark web recommend placing a fraud alert on your credit file. Basically, this is a temporary, 90-day notice that tells lenders pulling your credit report that you might be a victim of identity theft. 

Doing this signals to the lender to take additional steps to verify your identity so that no one misuses your credit. This is a free service at the top three major credit bureaus (Experian, Transunion, and Equifax). 

Fraud alerts are often confused to another comparable option – a credit freeze.

Credit Freeze

If you’re frugal like me, you might be inclined to opt for a credit freeze if you find your financial information has been stolen. 

This is definitely a cheaper option than credit monitoring or identity theft protection (credit freezes are now free through Experian, EquiFax, and Transunion for identity theft victims), but here’s why I don’t recommend it:

For starters, a credit freeze only freezes your credit reports, not your actual credit. Lenders are unable to pull your report, which they generally use to determine creditworthiness. It’s a hassle if you need to open credit on impulse, such as opening a store credit card. 

To use your credit, you can request a temporary “thaw” and later re-freeze – this takes some major planning and requires you to contact individual credit bureaus to do so.

In some cases, you will be required to pay a fee for credit freezes, though these fees are usually minimal ($3-$10 in most cases). 

Credit Monitoring

Credit monitoring is a popular option for any financially savvy person, even if your data hasn’t been compromised. This service looks for changes in a person’s borrowing behavior to find potential fraud, and will alert the consumer of any detection they find. Credit monitoring services look at a person’s credit report and credit score to help combat identity theft. 

It’s not a bad option for getting early warning about potential identity theft, but it’s generally only effective after your identity has been stolen and used. In other words, it doesn’t protect your identity from being stolen, but can help you take early action to mitigate the damage caused by identity theft.

Why ID Theft Protection Is the Best Option

If you’re going to invest in any type of service to protect your financial well-being, identity theft protection is usually a better route to take.  

Identity theft protection is more comprehensive than credit monitoring (it actually includes credit monitoring as part of the service). Services like Lifelock look for information on websites, public records, credit applications, and other areas where your identity could be compromised. 

Aside from just looking for gaps in protection, ID theft protection can reimburse you for out of pocket losses. Having your identity stolen can be a major expense for you, and you shouldn’t have to bear the brunt of the financial upset on your own.

As a consultant, I tell all my clients that if you want to protect your financial future, Lifelock is the best identity protection service you can get. They send you texts or emails whenever they see an issue and will work on your behalf to fix any issues so you don’t have to go through as much trouble or hardship. You can check out their plans and other details here.

It’s Never Too Late to Protect Yourself

Obviously, the ideal choice is to prevent identity theft, rather than dealing with it after the fact. I highly recommend Lifelock for this because it’s the only solution that can stop identity theft in its tracks. 

Whatever service or technique you choose to protect yourself, YOU are responsible for staying on top of your credit and financial well-being. Check your scores often (checking your own score does not impact your credit), stay alert of potential fraud cases, and never let your guard down.

And of course, be an active part of the Credit Makes Sense Community for more ways to take control of your finances.

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