“I’m concerned with identity theft, like many others. I’ve read about credit monitoring and I’ve read about credit freezing. What is the difference and which is better?”
Credit monitoring is very different from a credit freeze, or more formally known as a security freeze. Both are designed to protect you from true name fraud. Both are services offered by the credit reporting agencies. Both have pros and cons.
Credit monitoring involves the credit bureaus passively tracking your credit reports for changes that could be indicative of true name fraud. Credit monitoring services are effective for identifying new accounts, new addresses, new inquiries and other suspicious changes on credit reports. If the service detects any of those changes it will alert the consumer via text message or email.
A security freeze protects your credit reports by taking them out of circulation for new lenders. So, if your report is frozen no lender with whom you do not have a relationship will be able to access it. And, because the lender cannot get access to your credit reports or credit scores they will not extend credit, effectively stopping the fraud before it actually occurs.
The two services are not without their critics though. Credit monitoring is a fee based subscription service, which means you’ll pay roughly $15 – $30 per month just to monitor your reports. And, credit freezing requires the consumer to create online accounts with each credit bureau and manage their freeze accounts, times three. Freezing can also lead to you being denied for credit when you submit legitimate applications if you’ve forgotten to “thaw” your frozen reports and allow access by the lender.
The fee for freezing your credit files varies by state but it ranges from $3 on the low end to $15 on the high end, per credit bureau. You are also charged a fee when you thaw your reports. But, you are not charged monthly like you are with credit monitoring. And finally, if you have already been the victim of fraud then the credit freeze is free.