Identity Protection vs. Identity Restoration: Which Is Right for Me?

Credit Monitoring

Many identity protection companies offer credit monitoring as their standalone protection solution. Credit monitoring is the process of periodically checking your credit reports for accuracy as well as potential incidents of fraudulent activity. Credit reports are obtained from up to three major credit reporting bureaus: TransUnion, Experian, and Equifax. Identity theft protection companies offering credit monitoring will notify you should any of the following take place:

• A company examines your credit history
• Loan or credit card applications are filed under your name.
• A bankruptcy appears in your public records.
• A legal judgment is filed against you.
• Your credit limit changes.
• Your personal information changes.

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Identity Monitoring

As opposed to credit monitoring, which applies to factors that affect your credit report directly, identity monitoring deals with factors that do not show up on your credit report. While many protection companies will monitor instances of misuse or abuse of your identity, very few can do it in realtime. These companies employ what's called an analytical system, which provides live updates of your personal information, where it is being used, and whether the use is unauthorized. These events include the following:

• Change of address request
• New court or arrest records
• Payday loan applications
• Orders on services (cable, utility, wireless, etc.)
• Check cashing requests
• Social media
• Black market websites (illegal databases that trade ID theft victims' personal information)

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Security Freezes

When a new and fraudulent account is opened in your name, it can be very difficult to stop the ID thief from ruining your credit, draining your bank account, and destroying your good name. A security freeze stops creditors from seeing your credit reports or credit score, which in turn prevents reputable credit grantors from issuing new lines of credit in your name. When the fraudulent accounts have been resolved, you may then unfreeze your credit using a PIN provided by the reporting agency. A security freeze does not halt fraudulent activity on your existing accounts; it is designed to stop subsequent attempts to use your information on credit applications.

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Fraud Alerts

Like security freezes, fraud alerts can be done either manually or through an identity theft protection company. If you suspect you may be the victim of identity theft, you can issue a fraud alert on your credit reports, which notifies creditors and lenders of the breach and allows them to protect your account from further fraudulent activity. Depending on your circumstances, you could use one of several different fraud alerts:

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Lost Wallet Protection

In the event the contents of your wallet or purse have been lost or stolen, the identity restoration service will help you to replace these important documents and cancel the lost items. In order for the lost wallet protection to have significant effect, it is important to keep a list of what documents you carry in your wallet or purse. This will help the restoration company know which documents to replace, and where to look for potential incidents of fraud. Lost wallet protection usually includes, but is not limited to the following:

• Credit and debit/ATM cards
• Driver's license
• Social Security Cards
• Insurance cards
• Other certifications of licenses

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Limited Power of Attorney

While you always have the choice to act on your own behalf while restoring your identity, in some instances (particularly when the law is involved), you may benefit from agreeing to an ID theft company's Limited Power of Attorney policy, which gives the company restricted authority to act on your behalf. Through the Limited Power of Attorney, a company can legally represent you to creditors, credit reporting agencies, and even debt collectors. The company can also represent you in court, to insurance agencies, and other authorities to help halt, mitigate, or remediate/repair your credit or identity.

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Identity Theft Insurance

Many identity theft services will provide you with some type of insurance to help cover the out-of-pocket expenses associated with your identity theft. Identity insurance policies can range from as little as a few thousand dollars, all the way up to $5 million, and will pay for the various costs directly related to recovering your identity:

• Notary and Certified Mailing Costs: Costs incurred when sending letters to creditors, reporting agencies, and debt collectors
• Lost Wages: Some policies will reimburse lost wages should your identity theft affects your employment or your ability to receive your paycheck.
• Applications: The cost of reapplying for loans, grants, etc. that you were denied as a result of the identity theft
• Travel Expenses: In the event you need to travel in order to amend incorrect information on your credit reports or in public databases
• Child/Elderly Care: Costs incurred when you must pay to have your family looked after while you travel to amend your identity
• Attorney Fees: Lawyers fees for preparing and reviewing documents, or representing you in court

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Pre-Existing Thefts

A pre-existing theft is an identity theft event that has not been resolved prior to signing up for identity restoration services. Very few companies will provide restoration services for pre-existing theft; they will only cover events that take place while you are a paying customer. However, some companies do provide restoration on pre-existing thefts.

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