Keeping private information private: Are credit monitoring systems worth the cost?

The recent Capital One data breach is just the latest in a series of high-profile data hacks that have affected millions of people across North America.  

Fearing their private information could be compromised, many are considering "credit monitoring" services — but is it worth the cost?  

There are several credit monitoring services available — one of the largest is Equifax. For $17 a month, you get access to your credit score, you are alerted to any major changes to your credit report, and you receive up to $25,000 in identity theft insurance.   

It's a reactive system that informs you only if you become a victim of fraud. The idea is that credit monitoring allows you to minimize — not prevent — fraud.

I've never paid for credit monitoring, but I do take precautions. For example, with Equifax and Transunion you can request your credit report for free. I did this yesterday. The process took about five minutes and I expect to receive my report in the mail within three to five business days. I recommend people do this at least once a year. 

Once you receive your credit report, make sure all the information is accurate, checking for any credit facilities (cards, loans, etc.) that you don't recognize. If the information in the report is unexpected, contact the credit provider to get some answers.

I have also signed up with Credit Karma, which offers free credit scores, lists all your credit facilities, monitors your file and informs you of any unusual activity. Basically, it offers what Equifax offers for $17 per month, but for free. 

I'm new to Credit Karma so it's a bit early to make a recommendation, but so far, my experience has been positive. They do not sell your information, because if they did, they would be no better than the hackers. Instead, they receive a commission for every credit card procured by their site. I've never signed up for a card so I'm getting the credit monitoring or daily credit reports for free.   

Fraud alert

Years ago, while my wife was in the hospital giving birth, someone sneaked into our delivery room and stole her purse, which held her ID, bank card, credit cards and our apartment's fob key. Once we realized what had happened, I called our bank, reported her ID stolen and had my strata change the access codes on our building's fobs. I also called Equifax and TransUnion and asked them to put a "fraud alert" on my wife's accounts.  

With a fraud alert, the credit provider will take additional precautions when confirming the identity of the person applying for credit. The extra precautions are enough to deter many thieves.  

In our case, since the thieves had our address, our keys, and knew we would be busy at the hospital with a newborn,  they could have gone to our home, searched it, found my ID and/or other private information, and left without a trace.

Smart criminals often do not use the stolen information until months later, waiting until the victim is no longer on high alert. I didn't want to take that chance, so I also tagged my credit report with a fraud alert. While useful, fraud alerts aren't foolproof; you still need to be diligent and monitor your financial/credit accounts regularly for at least a year, if not longer. 

My last tip is to safeguard your social insurance number (SIN). Memorize the number, do not keep your SIN card in your wallet, and shred all unnecessary documents that contain your SIN. 

Any time providing a SIN is optional, do not provide it. For example, when I applied for my free credit report with Equifax, I had a choice of providing my SIN or answering some personal questions — I chose the questions.  

UPDATE, Aug. 14, 2019: After receiving my free credit report from Equifax, I no longer recommend that Canadians request this information through the mail. I was disappointed when my report arrived in an envelope with the Equifax logo prominently displayed. Until Equifax learns to be more discreet with their mail and their customers' personal information, I would consider some of the other alternatives. Some banks offer free access to your credit report, as do third-party credit monitoring services such as Credit Karma or Borrowell. I reached out to Equifax for an explanation but I was told management would only correspond with me via fax or mail.

This column is part of CBC's Opinion section. For more information about this section, please read this editor's blog and our FAQ.