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In the wake of its big data breach, the credit bureau Equifax is offering a free year of credit monitoring for all U.S. consumers.

Although this may be a helpful tool in spotting fraud, it doesn’t prevent identity theft from occurring. Here’s what credit monitoring services do and what steps consumers should take to protect their information and stop thieves who might already have it.

What is credit monitoring?

A credit monitoring service keeps an eye on your credit activity, including new accounts or large purchases. Essentially, it’s an alert system that reports on activity that’s already transpired.

Credit monitoring services will not interfere with suspicious activity as it takes place; it simply alerts you to it after the fact. For instance, you would be notified if a crook opens a new credit card in your name. That account remains open, however, and you then must take action.

Consider that between the time the card is taken out and you’re alerted, a lot of damage can be done. If the thief racks up several charges, it will be up to you to contact the credit card company and report the fraud.

Stop thieves from opening new accounts

The most effective barrier between you and credit fraud is to enable a credit or security freeze at the three major credit reporting agencies: Equifax, Experian, and TransUnion. A credit freeze stops these agencies from releasing your credit report. Without a credit report, most lenders and card companies will not open new accounts or extend new loans.

Unlike credit monitoring, this is a proactive approach to ensure your information is not used to open fraudulent accounts. Even if a hacker does have your personal information, a credit freeze will likely help prevent them from using it to get loans or credit.

A 360-degree approach to ID theft

The information hackers gained from the Equifax breach includes everything from credit card numbers to Social Security numbers. This means they might not only have the ability to open new accounts, but they might be able to access existing accounts, as well.

A credit freeze will not prevent someone from using your credit card number or hacking into a bank account. Neither will credit monitoring.

Here is where due diligence can save you time and money in the long run.

  1. Review and monitor all of your accounts

Even small charges that you don’t recognize should be reported as this could be a step toward larger purchases.

  1. Set up spending alerts

Create automated alerts for each of your bank accounts and credit cards. You can set up alerts for when your card is used in a foreign country or for transactions over a certain amount.

Banks and credit card companies will give you alert options, so you can be notified through your mobile phone or email account.

Setting up alerts is usually straightforward and easy to do. You can typically create them online.

  1. Check all of your credit reports

The three credit reporting agencies will give you one free credit report per year. Order a report from all three agencies and inspect it for any accounts or activity you don’t recognize.

  1. File your taxes early

Identity thieves often claim their victim’s tax returns. File before they do to avoid that situation.

What happens if your identity is stolen

If you discover someone used your personal information to commit fraud, there are a few steps you should take immediately. First, contact all the companies that were involved in the fraudulent activity so they can cancel accounts and begin their own investigation.

Your next step should be to place a fraud alert with the three credit reporting agencies. Fraud alerts are free and good for 90 days. This will make it tough for scammers to open new accounts under your name.

Then report the identity theft to the Federal Trade Commission. By documenting the theft, you will be able to claim certain rights, including stopping creditors from contacting you about the fraudulent accounts.

You might also want to file a police report. Be sure to bring a copy of your FTC report with you to the station to expedite the process.

Essentially there’s no silver bullet for every identity theft scenario, but these steps can help either prevent fraud or help you lessen the impact. Keep in mind that the faster you act, the more power you have in protecting yourself.

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