In the aftermath of the Equifax data breach and many others, households have been left in a scramble to protect themselves. With all the paid identity theft protection services available, it’s hard to know which one is best and whether it makes sense to pay the monthly costs.
Furthermore, out-of-pocket losses for victims of identity theft are minimal, often less than a few hundred dollars. Retailers and credit card companies end up footing the bill.
What’s important to keep in mind is that if your identity is stolen and used improperly, your true loss is how much time you must give up to resolve the matter. Working with your financial institutions, credit bureaus and government agencies to clear the matter up can take anywhere from 20 hours to well over 100 hours. It can even take years to clear up the harm it did to your credit report. This plus the grief and paranoia caused by the whole experience is the real damage.
So, the real value from these services comes in the form of saving you time and hassle by assisting with the recovery of your identity. This means having trained personnel available 24/7 to assist with contacting each of the credit bureaus and government agencies. More importantly, they should have a process in place to help resolve these matters expeditiously.
So, what would you recommend?
Identity theft recovery services – Contact your homeowner’s insurance provider to confirm whether you have identity theft recovery coverage on your policy. Generally, you want to have $20,000 or more in coverage. If you don’t, request a quote to add this coverage to your current policy. It shouldn’t cost more than $30 to $50 extra a year. Most policies include this coverage as a standard part of insurance policy.
Credit monitoring – Since most credit monitoring services, whether free or paid, provide the same benefit and offer no guarantee of catching everything, sign up with a free service like Credit Karma. You’ll want to sign up everyone in your household that’s 18 or older. You’ll be able to check your credit report through two bureaus for free at any time you’d like at no cost. Importantly, you’ll receive an email if any new credit accounts have been opened under your name.
Note: Use Credit Karma for its credit monitoring services. You can ignore the credit score they calculate for you and any advertisements related to how to improve your score.
It still makes sense to periodically check your credit report for free at each of the three credit bureaus each year. This process takes less than five minutes. If married, you can stagger this by having one spouse check their report every other month. Simply add a reminder to your calendar to check.
Do minor children need protection?
Children under 18 can get identity theft protection services coverage, but it doesn’t add much value because most kids don’t have a credit report, meaning it’s hard to be approved to open a line of credit for a child. In most cases, where a minor’s identity has been misused, it’s been by their parents and family members, not outsiders. It’s unlikely you’ll need to check your child’s credit report before they’re age 14. After that, get in the habit of checking once a year. If you have homeowner’s identity theft recovery coverage, they can assist with identity recovery for a minor.
Password protection – To protect your information and reduce the chances of someone trying to impersonate you, change your passwords on a regular basis, including passwords on email and financial accounts. Regular basis means changing them at least quarterly, but monthly is best. Set a calendar reminder so you remember to do this.
You can contact your advisor to discuss the best way to protect your and your family.