7 Free and Low Cost Ways To Protect Your Credit

By Silicon Valley Blogger on 5 May 2009 (Updated 30 May 2014) 4 comments
Photo: Steve Punter

There are a lot of reasons why you should want to guard your credit. One such reason?  To make sure your credit rating is in good standing so that you may qualify for the best loans in the land: with poor credit, borrowing money ends up becoming much more expensive as you are offered relatively higher loan rates than anyone else.  But more importantly, you'd want to watch your credit to prevent identity theft and avoid fraudsters from getting away with wreaking havoc on your accounts. 

Many people have fallen victim to identity theft and credit fraud such that it's become essential for us to keep an eye on our credit.  Most of the time, a fraud victim finds out a little too late that his or her identity has been compromised.  My own brother was surprised to learn after a visit to the bank that his social security number had a variety of foreign identities associated with it!  And just how many times have I been called by my credit card company about suspicious activity on my account? One time too many. So it's time to fight back with a few options.

 

7 Ways To Monitor and Protect Your Credit For Less

The fact is, you can track your credit information in a variety of ways, through free and low cost options as well as through paid services like those offered by myFICO.  The lowdown:

1. Order your credit report for free.
Most financially savvy people will be aware that their credit report is freely available through a site called AnnualCreditReport. We are entitled to one free report per credit bureau each year -- so this means that you can fetch a report each from Experian, Equifax and TransUnion on an annual basis.  While some people may request all reports at once in order to compare them to each other, say because they're interested in checking out their credit history before they make a big purchase, it's generally a better idea to order one report every 3 or 4 months (e.g. stagger your orders) over time to cover the length of the year. This way, you'll get an update on your credit information every quarter from one report obtained from a credit agency.  If you spot any errors on your reports, report them to the appropriate bureau right away!

2. Check out free sites and resources for credit information.
Besides your credit report, your credit score is something you should keep tabs on as well. What's great is that we can now get free credit scores through sites like Credit Karma. Mind you, the free credit score you receive through Credit Karma is not a FICO score, but one that is proprietary and based on reports from TransUnion. Still, if you don't mind handing your sensitive information to Credit Karma to work with (they promise to keep your data private), then you'll be privy to those free scores as well as tools, recommendations and simulators that help you get a good grasp of your credit standing.  Some other sites that offer free credit "grades" and proprietary ratings: KnowBeforeYouApply and Quizzle.  For FICO scores, you're going to have to check out myFICO's products for this information.

3. Ask your financial institution for assistance.
You may be able to score free credit information through the financial institution you do business with.  Some banks have been offering no cost credit monitoring to their customers to keep their loyalty. In particular, I read that some smaller banks and credit unions are offering their clients Equifax credit monitoring (check out SunTrust Bank, People's United Bank, Chittenden Bank) as a benefit.  Could your bank have this perk?  Also, check whether your credit card company offers additional fraud protection, consumer protection and security features through your debit or credit card.

4. Get a security freeze.
Then there are those who have opted to freeze their credit files rather than have to worry about their status every so often.  By freezing your credit, you're locking your credit information at all credit bureaus so that the agencies are unable to release your data unless you give them permission to do so. This means that you can't get a loan or any credit issued in your name unless you unfreeze your account first -- which is great if you're wanting to put a clamp on anyone accessing your credit. This may be a good alternative for consumers who don't need access to credit often, but for anyone else, there's the additional hassle and inconvenience to deal with "credit on ice".

5. Use a credit score estimator.

In the past, a free credit score was not easily available, so there were certain tools that cropped up to address this issue.  These simple tools (credit score estimators and simulators) are currently available to help you get a quick approximation of your credit score. Most estimators simply ask you a bunch of general questions in order to get your profile and supply you an approximate score.  They won't need your private information to make their calculations, so that's the advantage they have over free score sites like Credit Karma which will require you to fork over your social security number. 
 
6. Set up fraud alerts on your accounts.
I've read mixed reports on just how effective fraud alerts are when applied to your credit information. When you flag your credit report with a fraud alert, it's supposed to tell lenders to double check and review your credit information each time someone applies for a loan in your name.  Before the advent of electronic processing, these flags were much more effective, as lenders would review reports on a manual basis before issuing credit.  These days, however, credit is reviewed with minimal manual intervention and may be issued automatically in many situations.  Unfortunately, many lenders may not even be equipped with the right technology to capture these alerts, so it's often the case that these flags aren't used as easily and effectively as you'd expect.  Alerts are only a good idea if they work!

7. Pay for a credit monitoring service.
Finally, there's always the ease and convenience of subscribing to a service that monitors your credit reports for you.  Of course, it's all at a cost.  Are credit report monitoring services worth it?  "Do it yourselfers" who don't mind the extra effort and work involved to review their own credit reports on a regular basis will tell you that you don't need to shell out any money to do all this.  But to those who just don't have the time or inclination to bother with yet another financial task they have to remember and worry about, the answer is yes, services like myFICO Score Watch are worth every penny!  For many consumers, a few bucks a month buys them credit security and peace of mind.  Just make sure that if you pay for such a service, that you've done the due diligence to ensure that you're signing up with a reputable one.

 

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Guest's picture
MLR

Using a credit estimator (like Credit Karma) is a good way to make sure your credit is in the right ball park.

I got a free subscription for a credit monitoring service because my company had a HD with personal info stolen. I think its a pretty cool service. Could be worth paying for for some people.

Fred Lee's picture

Credit is that double edged sword-it really makes your life easier, but also makes it more complicated. Credit card fraud is so prevalent that nobody is safe, so it's good to make sure people are informed. Good advice, and thanks.

Guest's picture
SA

Very interesting article. I have signed up for the free trial month of credit monitoring at Myfico.com, and I have to admit their service is very cool. They email you a notice when your credit score changes, and it is somewhat addictive to know what's going on with one of those mysterious numbers. A full year's subscription is $90, though, and I'm not sure if I want to pay that much for what is (for me) mostly a toy or for curiosity's sake.

Guest's picture

It is critical that consumers start monitoring their credit. Stastics state that less than 15% of the people in this country understand what a credit score is, meaning that very few pay attention to their credit reports. This information gives them direction, and as a consumer advocate and credit score expert, this is in line with my goals to empower people with the knowledge and tools they need to maintain strong credit reports and scores. Great Information!