Is Identity Theft Protection Worth It?

If you have ever had your identity stolen, you understand the outrageous difficulty that comes with clearing your name, repairing your credit, and getting out from under financial responsibilities that someone else thrust upon you. In 2020, the Federal Trade Commission reported approximately 4.8 million identity theft cases. All of the innocent people who had to deal with these criminal acts suffered from the repercussions. One recommendation that may help prevent these issues is identity theft protection.

Before you sign up for a service offering identity theft protection, it is important to ask several questions and research the answers thoroughly. The following guide will help you make this important personal finance decision.

What Does Identity Theft Protection Actually Do?

The foundation of services that promise to protect your identity and personal and financial information rests on tracking and notification. They tell you immediately if someone attempted to use your Social Security number, name, or bank information to open a new credit card, get a loan, or to any other activity. They do not actually stop anyone from doing this.

If you have the discipline, it is quite easy to monitor your own credit reports with a free service online such as Credit Karma. Many banks and credit card companies also offer this service as a free perk with your account. Signing up for an identity theft protection service means you do not have to pay attention to everything yourself. If you think that is worth the convenience, by all means research a reputable company and use it.

Freezing Your Credit Is Another Option

Without any help from commercial services, you can freeze your credit completely so that nobody can open up cards in your name or otherwise take advantage of your personal information. This works well if you want to secure your credit profile and do not need new lines of credit yourself anytime soon. All you have to do is contact TransUnion, Equifax, and Experian directly and request a credit report freeze.

Rather than simply notifying you if someone attempts to steal your identity, this actually makes it impossible. Any time a credit card or loan application gets filled out, the creditor looks at your credit report to see if you are a good candidate. If your report is frozen, they cannot get information and will refuse the applicant.

When deciding whether to sign up for an identity theft protection service, you must weigh all the options and expenses carefully. While some services are not all they claim to be, a high-quality one can protect you from huge headaches and disastrous financial repercussions. Far too many people have their identity stolen and credit ruined every year when criminals take control. Luckily, there are many preventative measures to take, which include signing up for identity theft protection.