Different Types of Credit Protection
6 Min Read | Last updated: October 15, 2023
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Help safeguard your credit. Learn about different types of credit protection including credit insurance, credit monitoring, and identity theft protection.
At-A-Glance
- Credit insurance is a type of insurance that could pay off certain debts in case of an emergency.
- Other types of credit protection include credit monitoring and identity theft protection.
- With certain types of credit protection, you can monitor your accounts, receive alerts of suspicious activity, and monitor for signs of identity theft.
Life happens. So it’s good to take steps ahead of time to prepare and gain peace of mind. One of those steps involves taking care of your credit. There’s credit insurance, which promises to provide you with options in case of an emergency, but this isn’t the only type of credit protection that’s available today. Other types of credit protection include credit monitoring and identity theft monitoring. Both of these options are easy to enroll in and may even be included with your credit card.
In this article, we’ll delve into different types of credit protection, including credit insurance, credit monitoring, and identity theft monitoring. See what you should know about each one.
What Is Credit Insurance?
Credit insurance is designed to cover certain financial obligations if you’re unable to pay due to a financial setback like losing your job or becoming disabled. Also known as payment protection insurance, it is typically offered as an extra service by your loan or credit card issuer.1
Some of these programs promise to suspend your loan or credit card payments for a specified period if you can document a hardship that limits your ability to pay—such as having a doctor verify that you’re disabled. However, coverage varies considerably, and will vary, depending on your policy. Credit insurance directly pays the lender or creditor, helping to prevent the loan or balance owed from defaulting and helping to keep your credit score intact.
This type of insurance will typically incur a monthly fee, so it’s important to consider whether the costs are worth it. Alternatively, it may make more sense to put that money toward building an emergency fund that can help you cover your obligations if something goes wrong. Putting the money into a life insurance policy may be a better alternative as well.
Other Types of Credit Protection
Additional credit protections are available as well. These protections are different from credit insurance, and they may be included as a benefit with your credit card.
These include:
- Credit monitoring and alerts. These credit protection services track who’s making inquiries about your credit to help you guard against fraudsters and thieves.
- Identity theft protection. This form of credit protection safeguards you from threats like someone borrowing money or filing a tax return in your name.
Let’s take a closer look at the benefits and value provided by each so you can consider whether they suit your needs:
Credit Monitoring and Alerts
Credit monitoring and alerts allow you to keep an eye on credit score and requests for your credit report, such as those made by lenders when you apply for a credit card or loan. Given the number of businesses that use your credit score to evaluate different kinds of applications, keeping tabs on your credit is important.
Monitoring and alert services like those offered by the three national credit bureaus—Equifax, TransUnion, and Experian—provide early warnings of inquiries into your credit history and any changes to your credit score, allowing you to respond accordingly if an inquiry appears amiss.
Did you know?
As an added security measure to help protect against fraud, American Express reports a reference number to credit bureaus – instead of your actual account number.
Credit monitoring can be a valuable tool that can help you to stay vigilant against fraudulent activity. It can also alert you if someone fraudulently attempts to open an account in your name.
Identity Theft Protection
Identity theft protection helps to shield you from cyber criminals attempting to use your name and credit history to borrow money, steal from your bank accounts, or make a purchase. Like credit monitoring, these services alert you to activity on your credit report, so there is some overlap between them. But identity theft protection typically also monitors many other instances where your personal identity information is altered or used, such as tax filings to the IRS or requests to change your postal address.
Your credit card may offer a form of identity theft protection already; however, you can also obtain these services from third-party providers. The cost of identity theft protection services varies, depending on the company and in some cases, on the level of protection they provide.
Helping to Protect Your Identity with ID Monitoring from MyCredit Guide
ID Monitoring keeps an eye on your personal information across a range of internet sites on the Surface Web, Deep Web, and Dark Web. If the service detects that your personal information, such as your First Name, Last Name, Social Security Number, Date of Birth, Email Address, or Primary Address has been exposed or compromised, MyCredit Guide will alert you of the specific accounts exposed, as well as recommendations for actions you can take to help secure your data and identity. Enroll in MyCredit Guide today.
In 2022, the Federal Trade Commission (FTC) received more than 2.4 million fraud reports from consumers, with nearly $8.8 billion lost to fraud.2 Given the scope of this problem and the numerous difficulties people encounter trying to clear up the confusion that identity theft creates, enlisting identity theft protection services may be a cost that’s worth considering.
The Takeaway
Safeguarding your credit is important. Credit insurance is one option, but there are other ways to help safeguard your credit as well. Consider credit monitoring and identity theft protection to proactively monitor your credit.
1 “What Is Credit Insurance?,” Nerdwallet
2 “New FTC Data Show Consumers Reported Losing Nearly $8.8 Billion to Scams in 2022,” Federal Trade Commission
Elliot Kass is a journalist who has covered global business and technology from New York, London, and San Francisco for more than 30 years.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
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