credit monitoring

Do You Need Credit Monitoring to Protect Your Credit?

Holly Johnson — Tue, 15 May 2018 08:30:24 +0000

While the internet has improved our lives in numerous ways, technology has also made our personal information more vulnerable than ever. If data breaches from big stores like Target and Home Depot several years ago didn't convince you of this fact, the 2017 Equifax data breach, which may have released the sensitive data of up to 145 million consumers, probably helped you realize how much peril your personal information could be in.

If you've seen ads for credit monitoring services like LifeLock or Identity Guard, you may have wondered if signing up is worth it. You may have also heard about credit freezes and fraud alerts and wondered how those work. Before you take any steps to protect your credit and your identity, here's what you should know. (See also: Don't Panic. Do This Instead If Your Identity Gets Stolen)

The difference between credit monitoring, credit freezes, and fraud alerts

During the Equifax data breach, consumers' names, Social Security numbers, addresses, and, in some cases, credit card numbers were accessed by hackers. To control damages after the breach, Equifax created a special website where you could enter your information and find out if you were affected by the Equifax breach. It also began offering a year of free credit monitoring and other identity theft services to all U.S. consumers, whether their information was accessed during the data breach or not.

In addition to taking advantage of credit monitoring, Equifax and consumer advocates suggested consumers consider several other steps to protect their credit right away: freezing their credit reports and placing a fraud alert on their reports.

But what's the difference between these options? While each service has the same goal of protecting your identity and your credit, they all work differently and some may be better for some consumers than others.

Credit monitoring

Traditionally, credit monitoring is a service people pay for. With LifeLock, for example, you can pay a monthly fee to have the company continually check for fraud or threats to your financial accounts and credit reports. Other credit monitoring services work similarly, although they may offer different features.

Credit freeze

With a credit freeze, you usually pay up to $10 per credit reporting agency to make your credit report inaccessible to lenders, thereby making it impossible for hackers and scammers to open new accounts in your name. Note that you usually also pay a fee every time you want to unfreeze your credit. For now, credit freezes and unfreezes are free with Equifax.

Fraud alerts

If you don't want to freeze your credit completely, you can place three different types of fraud alerts on your credit report instead. Fraud alerts are free, and they require lenders to verify your identity before issuing new credit in your name. As the Federal Trade Commission notes, options include:

Initial fraud alert: This type of fraud alert is best for someone whose identity hasn't been stolen yet. It protects your credit from unverified access for up to 90 days.
Extended fraud alert: An extended fraud alert protects victims of identity theft for up to seven years.
Active duty military alert: This alert protects active duty service members from identity theft for up to one year while they are on deployment.

Should you pay for credit monitoring?

Whether you should pay for credit monitoring depends on your situation. Gerri Detweiler, education director for Nav, a company that makes tools for managing business credit, says that while there are more opportunities than ever to monitor your credit for free, there are times when paying for a more comprehensive service could be advantageous. "The monitoring on these platforms can be more robust," she says.

If you know that you will not take the time to monitor your credit accounts yourself, or you just want the peace of mind of knowing someone else is doing it for you, then paying for a subscription service may be worth it.

Freezing your credit report can also make sense, says Detweiler. But if you're doing it to prevent identity theft, you need to know the drawbacks. "It can be a hassle when you go to apply for credit, insurance, or even try to get a new cellphone," says Detweiler, mostly because you will have to unfreeze your credit report any time you want to apply for new credit. That can get costly.

Detweiler says she also worries that credit freezes create a false sense of security. While a freeze can prevent someone from opening new accounts in your name, it can't prevent hackers from using your existing accounts fraudulently or stealing your information.

As far as fraud alerts go, Detweiler chose this option when she was a victim of identity theft in 2017. While a credit freeze locks down your new credit, fraud alerts allow creditors to access your credit report as long as they are able to verify your identity. For this reason, fraud alerts may be a better option for someone who opens new credit regularly and still wants some protection against identity theft.

Other ways to keep your credit safe

If you are preparing for a crucial loan like a mortgage, new auto loan, or small business loan, for example, you want to make sure your credit is as solid as possible, says Detweiler. That's because lower credit scores may mean you won't get approved for the loan or you'll pay more in interest charges.

Plus, you'll want to keep your identity and personal information safe from hackers and scammers no matter what. If your identity is stolen, it can take months or even years to get the situation cleared up.

Detweiler says you should take advantage of the fact that you can get a free copy of your credit report from the three credit reporting agencies — Experian, Equifax, and TransUnion — once per year at AnnualCreditReport.com. By accessing your full credit report regularly, you can check for errors or fraudulent activity and report them immediately if you find them. (See also: How to Read a Credit Report)

There are also plenty of places where you can get a free credit score. Many credit card issuers give out free credit scores. Other free services such as Credit Karma give you an estimate of your credit score year-round and set up notifications to let you know when a new account is opened in your name.

Trevor Buxton, Certified Fraud Examiner (CFE) and assistant vice president of fraud prevention at PNC Bank also suggests the following actions to keep your credit safe:

Keep a close eye on your bank accounts. "If you notice unauthorized activity on your account, immediately call the number on the back of your debit, ATM, or credit card, or stop by your local branch," says Buxton.
Sign up for alerts on your accounts. Many banks let you set up your credit and debit accounts so you're notified any time a purchase is made.
Spread your free credit reports over the course of a year. Since you can get a free report from the three credit reporting agencies once per year, Buxton suggests spreading those out by accessing one free report every four months.

Notify credit reporting agencies of any false reporting. If you find any errors on your credit report, notify the credit reporting agency in question and dispute the information right away. You can find out more about how to dispute errors on your credit report on the FTC website.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Protect Your Credit After the Equifax Breach

Dr Penny Pincher — Mon, 02 Oct 2017 09:00:06 +0000

Approximately 143 million records were stolen in the recent breach of Equifax, including names, Social Security numbers, birth dates, and addresses. Even before the Equifax incident, identity theft has been on the rise. With this recent theft of millions of records, the risk of credit fraud is sure to grow.

You can take measures to protect yourself from identity theft. These options range from watching out for suspicious activity on your accounts, to paying for credit monitoring services or even freezing access to your credit reports.

Is it worth the trouble and expense to freeze your credit report, or can less intensive steps sufficiently mitigate your risk of identity theft? Here are the options available to you.

Manual account monitoring

You can check your monthly statements from existing bank and credit accounts for unexpected transactions. If you see a transaction you did not make, you have a major red flag.

How much cost and effort?

The cost is zero, but it takes effort to stay on top of all your statements and look for unexpected activity. If you spot theft, you will need to work with your financial institution to undo the fraudulent transactions.

How much protection?

In many cases, you will not be responsible for fraudulent transactions if you report them to the financial institution and work to resolve the issue. (See also: Why Credit Is Safer Than Debit)

Manual credit report monitoring

In addition to monitoring transactions on your existing accounts, you need to keep watch in case thieves open new credit accounts using your stolen personal information. You can request a free copy of your credit reports every 12 months from the major credit bureaus (TransUnion, Equifax, and Experian) and manually check for new accounts that were created by someone else.

How much cost and effort?

Free if you use the free credit reports, limited to one per year per credit bureau. If you want to check your reports more frequently than once per year, you can pay a small fee, typically around $10 per report.

How much protection?

Even if you are diligent in requesting and checking your credit reports, a fraudulent account could go unnoticed for some time due to the delay between when a fraudulent account is created and when you obtain an updated credit report and notice the new account.

How to get your free credit reports

Visit AnnualCreditReport.com to request your free credit reports. You can request reports from all three credit bureaus at once, or you can order from one bureau at a time. Ordering one free report every four months can help you keep an eye on your credit throughout the year without paying any fees.

Credit report monitoring service

You can sign up for credit monitoring services that send alerts when new credit accounts are opened, or when a credit inquiry has been made on your report. (See also: Is Credit Monitoring Ever Worth It?)

How much cost and effort?

Credit monitoring services are offered by the credit reporting agencies and other companies with costs ranging from a few dollars per month up to $25 per month. Free credit monitoring is available from Credit Karma whose free service is supported by loan and credit offers.

Credit monitoring is automatic in the sense that it provides alerts when an inquiry occurs or a new account is opened, but you will need to check the alerts to see if the activity is legitimate. And if there is fraudulent activity, you will need to take steps to counter it.

How much protection?

Credit monitoring provides alerts when new credit accounts are opened, but it does not stop thieves from opening fake accounts. The automatic monitoring simply helps you spot fraudulent new accounts quickly and take action to reverse charges and close the accounts.

Identity theft insurance

Identity theft insurance pays for some of the expenses you could incur associated with restoring your identity, including legal fees and fees from financial institutions. Coverage may also include out-of-pocket losses from credit fraud or other misuses of your personal information.

How much cost and effort?

Identity theft insurance typically costs around $25 to $60 per year and may include credit monitoring and other services.

How much protection?

If you become a victim of identity theft and are covered by identity theft insurance, the ball will still be in your court to resolve the issues. The insurance will cover certain types of expenses you may incur and limits your out-of-pocket losses.

Fraud alert

You can place a fraud alert on your credit report, which notifies credit issuers to contact you for confirmation before setting up a new credit account. An initial fraud alert stays on your credit report for 90 days, and you can extend it for another 90 days after that. An extended fraud alert for confirmed cases of identity theft lasts for seven years.

In addition to putting a fraud alert on your credit report for new credit accounts, you can also request a security alert with ChexSystems for new checking and savings accounts.

How much cost and effort?

It is free to place a fraud alert on your credit file. Once you put a fraud alert on your file with any one of the three major credit reporting agencies, it will be shared with the other two.

How much protection?

When a fraud alert is on your credit report, credit issuers are supposed to contact you before opening a new credit account, but compliance may vary.

Credit report freeze

A credit freeze with the credit reporting agencies prevents your credit report from being shared unless you "unfreeze" your credit report. This prevents thieves from opening fraudulent new credit accounts using stolen personal information.

How much cost and effort?

A credit freeze comes with a higher level of hassle and cost than some other fraud prevention measures. You need to freeze your credit report with each of the three credit reporting agencies, which means requesting the freeze three times. Then every time you want to apply for a credit account, or allow access to your credit report for an employment or housing application, you will need to unfreeze your credit report, then refreeze it afterward.

You'll pay fees every time you freeze or unfreeze your account. The fees vary by state, but generally they range from $5 to $15 for each freeze and unfreeze. Note that in light of the security breach, Equifax is offering free credit freezes until November 21, 2017.

Each bureau will give you a personal identification number (PIN) that you'll need to keep track of in order to unfreeze your reports. You can also request a security freeze with ChexSystems to block new checking or savings accounts from being opened at no cost.

How much protection?

A credit freeze is effective at stopping new accounts from being opened, but you'll still need to monitor existing bank and credit accounts for fraudulent activity, since existing accounts are not affected by a credit freeze. If you know you'll be applying for credit (or a job or apartment that might require a credit check) multiple times in the near future — or if a credit freeze just sounds like too much hassle — you may be better off signing up for a credit monitoring service and perhaps placing a fraud alert on your credit report instead of doing a freeze.

If you rarely or never apply for credit, and will not need to provide access to your credit report for employers or landlords, you may be better off freezing your credit report indefinitely. Keep in mind, though, that it is possible that the PIN needed to unfreeze your credit report could be compromised by thieves, who could unfreeze your credit report themselves. For added protection, you could place a fraud alert on your credit report before freezing it.

A "lock" may be another option

Starting January 31, 2018, Equifax will be offering consumers a new, permanent service that gives them the ability to "lock" and "unlock" their credit report at will. This new service is reported to work in a similar fashion to a freeze, and it is yet to be determined what exactly will differentiate the two methods. Equifax claims the service will include more "modern authentication techniques" for unlocking and accessing your credit report. If you elect this route, make sure to carefully read the terms and conditions before signing up.

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This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

FICO or FAKO: Are Free Credit Scores From Credit Cards the Real Thing?

Damian Davila — Thu, 19 Jan 2017 11:00:10 +0000

Building up and maintaining a good credit score is a great step toward achieving your financial goals. An excellent credit score can open doors to better financing for your dream home or a more reliable set of wheels. When used properly, a credit card can help you start off, continue to improve, or even build back your credit history. Your on-time monthly credit card payments count as 35% of your FICO credit score, after all.

The traditional way to find out your credit score involves contacting one or all of the credit bureaus and paying for their service to provide your score. Thanks to FICO's Open Access initiative in November 2013, however, credit card users may be able to access their scores free, every month on their statements. More than 50 lenders, including American Express, Bank of America, Chase, and Capital One, offer their customers free credit scores.

It's important to note, though, that the score you get on your statements may not reflect the actual score your mortgage lender or car dealership is looking at when considering you for a loan.

Case Study of a Free Credit Score

I have accumulated a few credit cards over the years, and some of those cards offer me a free credit score. I've looked at the credit scores indicated on my latest statements from each of these cards, and the scores vary by up to 59 points.

So, what's going on? Which of these credit scores can I trust?

The problem is that these credit cards are all using different factors and ways to calculate the score. Some of these factors include:

The date my credit information was pulled;
The credit reporting agency they use; and
The type of credit score they are reporting.

Given these different factors, you can clearly see that not all free credit scores are alike. It's important to know what credit data you're getting to correctly evaluate your financial health.

3 Criteria to Analyze Your Free Credit Score

Based on these findings, let's review key questions that you should ask yourself about your free credit score from an existing card, or one from a card that you're planning to open.

1. Is It a FICO Score?

Not all credit cards offer the same free credit scores. Capital One offers free TransUnion VantageScore 3.0 scores to all of its cardholders and, since March 2016, to non-customers through its CreditWise credit monitoring service. CreditWise is available as a smartphone app and allows you to sign up for a new account within the app. (See also: 7 Apps That Monitor Your Credit for You)

Different credit cards use different algorithms to calculate scores. Generally, a FICO credit score provides you a closer look to what your lenders would actually get when pulling your credit score on their own. Credit scores other than a FICO are considered "equivalency scores" or "educational scores," and are often referred to as "FAKO" scores. While a FAKO score may give you a general idea of where you stand with lenders, it may not be accurate enough to tell you whether or not you'll get approved for a loan.

2. If It's a FICO Score, Which One Is It?

FICO has been in the credit score business for over 25 years and it has developed more than 50 types of credit scores! Most credit card companies offering a free FICO score provide the FICO Score 8. The key differentiating factors of a FICO Score 8 are that this score:

Gives a bigger weight to cards that have a balance close to the cards' limit;
Is more forgiving than other FICO score versions to one-time late payments of at least 30 days;
Provides a bigger penalty for numerous late payments;
Reduces "tradeline renting" benefit (a credit repair practice in which individuals with poor credit are added as an authorized user to a stronger credit account); and
Ignores collection accounts with an original balance under $100.

3. What FICO Score Will Your Lender Use?

Depending on their industry and preferred credit reporting bureau, lenders can use different scores. Here are some examples provided by FICO:

According to FICO, the FICO Score 8 provided for free by most credit card companies is most useful when applying for a credit card. For other purposes, your FICO Score 8 may not appropriately predict your likelihood of not paying as agreed in the future of a specific credit obligation.

The Bottom Line: Should You Sign Up for a Free Credit Score From Your Credit Card?

Yes, you should definitely sign up for that free credit score from your financial institution as long as it's a FICO score. The main reason is that the lowest price offering from FICO (9 FICO scores, including FICO Score 8, and Equifax credit report monitoring) is $19.95 per month or $219 per year. If your current card doesn't offer you a credit score or you're looking to take advantage of a balance transfer with a 0% promotional APR, here are Wise Bread's recommendations on best credit cards that offer credit scores.

Having access to your free FICO Score 8 will allow you to save money on credit monitoring fees until you get closer to the acceptable range that your lender is looking for. Once you're closer to your target score, find out from your lender what score they are using and consider signing up for the myFICO score tracking service that gives you access to that specific score (ask for score name and company that issues it). While this option may cost up to $29.95 per month for a couple of months, it will allow you to have a more accurate picture than your FICO Score 8 and prevent a hard pull from your lender. Remember that each hard pull on your credit history slightly brings down your credit score, so it's a good practice to minimize hard pulls.

Of course, make sure to read the fine print on the service agreement with myFICO so you don't miss the deadline to prevent a charge for the next month.

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Apps That Monitor Your Credit for You

Damian Davila — Tue, 06 Dec 2016 12:00:17 +0000

The average FICO credit score of U.S. consumers is 695, according to the latest data from the FICO company. If you think this number is encouraging, you'll also be glad to hear that 54.7% of Americans are able to score at least a 700!

This data proves that it's very possible to improve your credit score. There's no excuse these days for not monitoring your credit. Credit score monitoring? There are apps for that! Let's review some of the best free and easy to use apps available for giving your credit score a boost.

1. Credit Karma

Claiming that you can sign up for a new account within two minutes, Credit Karma's app offers free credit score tracking. Your score and list of reports are updated weekly. Credit Karma offers a credit report card, which breaks down every factor contributing to your credit score health, such as open credit utilization rate and average age of open credit lines, and helps you understand how your actions affect your credit score.

Keep in mind that Credit Karma shows you a Vantage 3.0 credit score, which isn't the same as a FICO credit score. The app allows you to track your credit score from TransUnion and Equifax (two of three main credit reporting bureaus, the third one is Experian). To learn more details about Credit Karma, take a look at our review.

2. Mint: Money Manager, Budget and Personal Finance

Besides being a free debt management tool, Mint offers a free credit monitoring app that provides an easy-to-understand summary of how you can improve your credit score. The credit score provided under any of these apps is the Equifax Credit Score, which is a proprietary credit model developed by Equifax.

By connecting your bank accounts, credit cards, and investments accounts to your Mint account, you'll have a comprehensive picture of all of your finances, too.

3. Credit Sesame

Credit Sesame's app offers you a peek into your Experian National Equivalency Score (ENES). While the FICO credit score ranges from 300 to 850, the ENES ranges from 360 to 840.

By using this alternate credit scoring model, Credit Sesame is able to perform a "soft" pull on your credit history and show you how much you owe, what your current interest rates are, and what your credit score is.

Additionally, Credit Sesame offers you some refinancing options in partnership with Lending Club to pay off higher-interest debt. To help you understand whether or not this would be a good fit for you, Wise Bread took a closer look at Credit Sesame' services and the steps of the loan process application process through Lending Club.

4. Credit.com

Credit.com is another option to access your Experian National Equivalency Score and Vantage 3.0 credit score at no cost. You'll receive a grade, ranging from A+ to F, for each one of the five factors affecting your credit score: payment history, debt usage, credit age, account mix, and number of inquiries.

Through its visual aids and specific action items, this app allow you to spot credit blunders and understand how to fix them.

5. Experian

Since so many of these apps use the credit rating model from Experian, you may be wondering if you can just go straight to the source. Yes, you can! Through the app you'll monitor changes to your Experian credit profile and have the option to sign up for push notifications directly on your device whenever a change takes place. Your free Experian credit report is updated every 30 days.

6. TransUnion

The credit reporting bureau allows you to check your TransUnion credit report from your smartphone. Similar to the FICO credit score, the TransUnion credit score ranges from 300 to 850. Still, remember that the FICO and TransUnion credit score aren't the same.

7. CreditWise

CreditWise offers free credit monitoring services from Capital One. You don't need to be a Capital One customer to sign up for a new account. If you're an existing user of the Capital One CreditTracker service, you can use your existing username and password that you use at the CapitalOne.com site. Every week, this app will provide your TransUnion credit score. A differentiating factor of CreditWise is its credit simulator, which allows you to simulate ways to improve your TransUnion credit score.

The Bottom Line: Know Your Score!

FICO maintains a total of 28 different FICO scores, which are widely used by issuers of home, auto, and credit card loans. Remember that each one of these apps offers a free snapshot of a credit score based on a separate model and that snapshot is only for educational purposes. If you want to get the actual FICO credit score, you'll have to pay at least $19.95 per month.

While the advice provided by any of these services can be valuable to improve your credit score, your potential lender may be working with a very different score than the one gleaned from an app. If you're working toward meeting the requirements for a mortgage or auto loan, ask your lender what credit score she's using. That way, you'll choose the app that can provide a more accurate estimate.

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Simple Ways to Protect Yourself From Medical Records Theft

Carrie Kirby — Fri, 28 Oct 2016 09:30:25 +0000

Hacker attacks on medical records are exploding, with more than 113 million health files stolen in 2015. Criminals are using health records to commit medical identity theft, a crime that causes even more suffering than financial identity theft.

Think having credit cards or a mortgage opened in your name is a nightmare? Maybe, but it's nothing compared to what victims of medical identity theft have suffered. Victims of this crime often suffer from financial fraud, just like those who have their credit cards compromised, says Ann Patterson, program director of the Medical Identity Fraud Alliance.

Resolving medical identity fraud is much more difficult than cleaning up a case of financial ID theft. The majority of medical ID theft victims reported spending an average of $13,500 on lawyer fees or medical bills in their names, compared to an average of just $55 to clean up financial ID theft, according to a 2015 Ponemon Institute survey. And with no centralized source to consult like a credit report, and no real-time alerts like banks and credit monitoring services, it may take a long time to even realize you're a victim of medical identity theft, Patterson warns.

Whether you have just received a discomfiting letter from your health care provider that a data breach has occurred, or you simply want to head off this kind of life disruption before it happens, here are seven steps you can take to protect yourself from medical ID theft.

1. Read Your Mail

Those explanation of benefits statements from doctors' offices and hospitals may not be light reading, but you should look at them, at the least to verify that you saw the provider named on the date listed. Also, if you get mail from an unfamiliar doctor's office, don't toss it out without reading it — what you might think is junk mail could actually be a bill taken out in your name by an identity thief.

2. Review Your Medical Records

One positive thing about medical records going online is that it makes it easier for patients to periodically check that all the procedures listed there were actually performed on you, and that the details listed match your identity. If your records aren't online, you can ask to check your file when you're at the doctor's office.

Reviewing medical records could be a matter of life and death, because "information, such as an allergy to penicillin, is often deleted from a patient's medical record when it is stolen by a hacker or used by a buyer," warns the Institute for Critical Infrastructure Technology in a report that was presented to the US Senate in September.

3. Ask About Safeguards

Whether it's your doctor's office or your kids' school collecting data about your family, ask what happens to the paperwork you fill out. Is it shredded after being entered into a database, or tossed into the recycling? What kind of security protects those databases?

4. Don't Always Do as You're Told

Medical forms frequently ask for the patient's social security number. Patterson leaves that line blank, and if challenged, she explains that the omission is for privacy reasons. "I have yet to be refused medical care because I refused to provide my Social Security number," she says.

5. Treat Health Information Like Financial Information

Just as you should shred your tax documents and bank statements before tossing them, you should shred your doctor's office visit receipts, prescription labels, and even destroy prescription bottles with information stickers on them, Patterson says.

And if you wouldn't post your bank account balance on social media, don't be so quick to divulge upcoming medical treatments either. While it might be hard to imagine the harm in asking for thoughts and prayers for an upcoming surgery, Patterson urges patients to look at their profile from a criminal's point of view.

"You're putting out free information to give a detailed profile of you," she says, such as what region you live in, what doctors you frequent, and what ailments you have. If a criminal knows you have cancer, for instance, they may be able to "buy painkillers in your name and not raise a red flag immediately, because it fits your profile," she says.

If you think it's okay to share such information because your posts are only seen by friends and family, consider that, according to the Ponemon Institute, about half of medical ID fraud is committed by people who know the legitimate account holder.

6. Use Monitoring Services When Offered

It's now common for health insurers and other providers who have been hacked to offer members free fraud monitoring services. Take advantage of the offer! Patterson says that less than half of consumers offered free subscriptions actually sign up. Although they monitor for financial fraud — they won't tell you that someone checked in as you at a hospital — the services can provide valuable red flags. For instance, if a fraudulent medical bill goes into collections, it will show up on your credit report, and therefore trigger a fraud monitoring alert.

7. Be Careful What You Tell Your App

There are lots of fitness and health monitoring apps and websites nowadays, and while it's fine to sign up for one, look into the company that made the product, and think carefully about how much personal health data you share with them.

"Most of these companies are not regulated in the same way as your health care provider or health plan to protect your personal health information," MIFA warns.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Don't Panic: Do This If Your Identity Gets Stolen

Paul Michael — Tue, 25 Oct 2016 10:30:09 +0000

The Bureau of Justice Statistics (BJS) reported that in 2014, 17.6 million Americans aged 16 or older were victims of identity theft. That, alone, is a scary fact. And to be honest, when anyone says the phrase "identity theft," most of us picture lives being upended, years of court cases, and bank accounts being wiped out.

But let's look a little deeper into this issue, because while it is definitely something to keep on your radar, identity theft is a broad term. Plus, these days, with so many people being affected, there are more resources available than ever before to help you out. So before you go into full-blown panic mode…read on.

It's Highly Unlikely Someone Will Actually "Steal" Your Identity

Of the 17.6 million Americans that were victims of identity theft in 2014, only 4% of them actually had their personal information used to open a new account. Think about that for a second, and you should already be feeling much more calm. The chances of someone actually pretending to be you, opening up account everywhere in your name, and sinking you into a world of pain, are very slim indeed. Sadly, media outlets and the news don't like to cover that, because it's not sexy, and it doesn't get ratings. That's why the identity theft stories you hear about are horrific. But in reality, it is highly unlikely that you will have your literal identity stolen.

Identity Theft Is a Very Broad Term

The phrase itself puts most people in a cold sweat, but it covers a lot of different aspects of the crime. The vast majority of identity theft crimes, around 86%, are tied to the misuse of a credit card or bank account. That's it. Someone grabs your digits, takes out some cash, and calls it a day before the card gets canceled. Or, they withdraw a bunch of money and move on to someone else's account. Either way, it's quick and dirty, but rarely goes beyond that level of theft. And as the next point proves, it's not worth worrying about…

Credit Card and Bank Account Misuse Is Covered

If someone manages to get hold of your credit card, either by stealing or cloning it, they will undoubtedly go on a shopping spree. But you don't have to worry. While the initial shock of seeing thousands in charges you didn't accrue is horrifying, you are not on the hook for it. Card issuers and bank accounts cover you for most (and generally all) of the theft. You will get all of those funds put back onto your account, usually very quickly, and the card issuer or bank will take the hit and investigate the crime. Sadly, very little of this money is recovered from the thieves who did the spending. Unless there is CCTV footage of them committing the crime, and significant evidence to track them down, they'll get away with it. But rest assured, you won't have to foot the bill.

Over 52% of Identity Theft Victims Resolve the Problem in a Day or Less

Not years. Not months. Not weeks. Just one day. That should come as great comfort if you're worried about the time and expense it could take to sort out the mess some nasty crook has created for you. And here's further cause to relax…only 9% of victims spent more than a month trying to get their lives back on track, and even then, it was not a month taken off work, fighting eight hours a day, seven days a week. It is simply a process that can take time to get right.

This Is a Common Problem, So You'll Get Help

When identity theft first popped up, it was hard to get card issuers and banks to listen to the facts. But these days, that has all changed. There were more victims of identity theft in 2014 than there were property crimes, so it's definitely on law enforcement's radar. Most credit card companies monitor accounts very closely, and track your spending habits. They will often shut down a card immediately if they believe there is suspicious activity going on — for instance, an unusually large purchase, many purchases in one day, or purchases made out of state.

If your card is stolen, report it the moment you notice it is gone, or has been cloned. If you see a new account has been opened in your name, report that immediately. These companies want your business, and they are setup to handle this kind of crime.

It's Easy to Stop Identity Theft in Its Tracks

These days you have resources and tools to monitor your accounts and your credit reports. The Federal Trade Commission (FTC) puts this kind of protection into two basic categories.

Credit Monitoring

This tracks activity on your credit reports, and notifies you if a company checks your credit history, a new account is opened in your name, a debt collector reports a late payment, your credit limits change, or your personal information changes. It's worth noting that this isn't actually protection, but a warning. However, once you're alerted, you can act on that information.

Identity Monitoring

This alerts you when personal information, including your driver's license, passport, Social Security number, medical ID number, or bank account information, is used in ways that don't show up on your credit report.

You will already know of major identity theft protection sites and services out there, including LifeLock, CompleteID, IdentityGuard, and IDShield. Your bank account and credit card issuers may also have their own version of identity theft protection for you to take advantage of. All of these services require a nominal monthly fee, but for the peace of mind offered, it's worth it.

Criminals Need More Than Just Your Personal Information

If you see a news story talking about a data breach, take the time to find out what has actually been stolen. As Time reported in 2015, criminals can do very little with your name, birth date, and email address. Even with your address and phone number on top of that, they aren't going to be able to do much without a SSN and/or account numbers and passwords. The most they can do is some kind of "phishing" scam, where they will use your personal information to try and get money out of you in some way, via phone or email. But use your common sense, and never respond to a cold call or email. Always contact a business yourself to verify this.

This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Is Credit Monitoring Ever Worth It?

Dan Rafter — Wed, 30 Sep 2015 21:01:10 +0000

Should you pay for credit-monitoring — that identity theft protection service that promises to alert you whenever your card provider notices suspicious activity on your account?

The short answer? Probably not. If you're proactive in monitoring and protecting your credit, you likely won't need these services. But in some cases, credit monitoring and identity theft alerts might make sense. Read on to learn about free alternatives to paid services, as well as when it actually makes sense to pay for them.

Free Credit-Monitoring Alternatives

You can already order one copy of each of your three credit reports — one each maintained by the three national credit bureaus Experian, Equifax, and TransUnion — every year at no charge from AnnualCreditReport.com.

These credit reports will list the amount you owe on your credit card accounts, and all active and inactive credit card accounts in your name. It will also list any auto, mortgage, student, or other loans you are paying back, and how much you owe on these loans. A separate area of your credit report lists any negative judgments against you, such as bankruptcy filings, housing short sales, or foreclosures.

You can study these reports to uncover any unusual financial activity in your name, such as credit card accounts that you don't ever remember opening. You can also look for missed or late auto loan or mortgage payments that you know you actually paid on time. You can then report this suspicious activity to the credit bureaus.

Another place that offers free credit monitoring is your credit card. Many credit cards offer credit monitoring tools as well as access to your credit score each month. Check out the best credit cards that offer free credit monitoring tools.

How to Handle Fraud for Free

If you do think that someone has illegally taken out a credit card in your name, you can place a fraud alert with any or all of the three credit bureaus. Once you do this, you are entitled to a free copy of your three credit reports once every 90 days, which gives you even more ability to monitor your credit on your own. Filing a fraud alert is free, and lasts for 90 days. You can renew these alerts, again for free, as often as you'd like. This sort of protection renders identity theft and credit-monitoring services even more unnecessary.

You can also spot fraudulent purchases on your existing credit card accounts without the help of add-ons. Just study your monthly credit card statement when it comes in the mail. Even better, log onto your credit card account every week to study the activity on your card. If you see a suspicious purchase, alert the provider of your card. Plus, many banks and credit card companies will proactively alert you of any suspicious activity — at no cost.

Know, too, that you won't be responsible for a big bill even if someone uses your credit card to run up thousands of dollars in new purchases. Your liability for credit card fraud is capped at $50 maximum, no matter how many fraudulent purchases were made with your card. And most issuers of credit cards won't charge you anything if you report fraudulent purchases.

When It Makes Sense to Pay for Credit Monitoring

There is a caveat, though. If you don't take the time to order your credit reports, or if you pay your credit card bill each month without even glancing at the new purchases you made, paying for a program like credit-monitoring or identity theft protection might make sense.

Yes, you can do everything that your credit card company offers on your own, at no charge. But if you know that you won't take the time to monitor your credit card accounts yourself? Then that small investment every month might make financial sense. This is especially true if you suspect ongoing fraud, or have several new credit-related activities on your report.

Sure, in most cases, paying for monitoring doesn't make financial sense. But you know yourself best — if paying for credit monitoring will keep you best alerted to potential issues, it's an excellent investment in your financial health.

Have you ever been a victim of identity theft or credit fraud?

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Can Your Spending Patterns Affect Your Credit?

Silicon Valley Blogger — Tue, 01 Dec 2009 17:07:07 +0000

I am one who prefers to use credit cards over cash for the convenience and ease of use of dealing with the plastic. Since I always pay my monthly bills in full, using credit cards has never been an issue for me. In fact, I'm always on the lookout for good credit card rewards programs and I readily take advantage of those 0% interest credit cards that allow me to take out free loans for a limited period of time. No worries since I always pay off my balances in full before the intro periods are up.

But regardless of how fiscally cautious and responsible you are as a credit card holder, you may still be curious to know just how much credit card companies know about you through your card use. The truth is, our card spending patterns provide information that is monitored by issuers; and this data has been used to affect our credit ratings.

This article from CreditCards.com is quite telling: credit card companies are interested in where we shop, how much we earn (which they may try to verify based on activity in our accounts), where we live, how much we normally spend per year and even what nationality we are. So it's not just how you pay your bills that goes on record, but also how and where you use your money. These companies keep their eye on how you shop, and use this data to determine your financial health. Certainly, they are mining a lot of our personal information for a variety of purposes. Here are a few of those reasons.

To know which products to market to you

I've been receiving a lot more telemarketing calls from my credit issuers lately and it's no doubt linked to what they know about me as a customer. This is nothing new though, as many retailers use the information they get about you to pitch more products your way. If you use sales and store catalogs, then you know what I mean!

To monitor your account for possible fraud

I've been contacted more than once for possible suspicious activity in my credit card accounts. This kind of free monitoring is something I appreciate from the credit card companies. At least they're putting their information gathering to good use this way.

To manage risk

Here's where a lot of consumers may feel a bit uncomfortable about the extent of tracking that their credit card companies are doing. The truth is, these companies watch your FICO score and credit report like a hawk to gauge your credit-worthiness. Even financial accounts you have at different institutions may be subject to scrutiny by credit companies and agencies such that any financial transactions you make may influence your credit rating. You may be paying your card bills on time but if you're late on your mortgage payment, watch out! That just may be grounds for your card rates to go up or for your credit limit to get cut. It's therefore important to check your credit score on a regular basis to keep abreast of what it is that is visible to lenders and credit watchers. You'll want to ensure that these reports are accurate.

To monitor information that may be used for law enforcement.

If need be, financial data may be used for legal situations and cases. Our financial records may be utilized and entered as potential evidence in disputes, reviews or investigations of any sort.

That said, I'm not at all surprised that our financial behaviors are easily monitored by those we go into business with. When you enter into a relationship with a financial institution such as a credit card company, bank or mortgage lender, you should assume that your data is being tracked to form your profile as a debtor or consumer. It's the tradeoff we make to become borrowers or customers of companies that offer us the privilege of being part of a financial system that helps us thrive and prosper in the material sense.

Can You Avoid Being Monitored?

While it may be concerning that banks and credit card companies are aware of just how and where you spend your bucks, the good thing is that there have been steps taken by the government to pursue reform and regulate the card industry further. The Credit CARD Act has been put together to address the "abuses" that have been rampant in the industry for some time now. By early next year, the full effect of this legislation will be in place and may hopefully make a dent on some of the undesirable practices that card companies have been imposing upon their customers, including unpredictable rate increases, unfair changes in credit limits, and unfavorable adjustments to terms and conditions.

While the government is pushing for change in this area, there are things that consumers can do to protect themselves from this kind of scrutiny, if they so choose. It's always our prerogative to limit the use of credit cards when participating in financial transactions. It's simple: if you use cash, there won't be any data to track. As it stands, this could be one more reason for why using cash-only rocks.

So are you at all surprised by how much your spending behavior can affect how your lenders and card companies are viewing you? The bottom line is that there are both good and bad implications for having "big brother" watch how you shop. Well nothing's for free. In this case, we give away some of our privacy for the convenience of using the plastic.

This article is from Silicon Valley Blogger of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Free and Low Cost Ways To Protect Your Credit

Silicon Valley Blogger — Tue, 05 May 2009 16:15:07 +0000

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.

This article is from Silicon Valley Blogger of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Once Bitten Twice Shy: What is Credit Security Worth to You?

Nora Dunn — Sat, 23 Aug 2008 01:16:25 +0000

Anybody who has had their identity stolen is usually willing to pay good money to ensure it never happens again. Weeks upon weeks upon months of tiresome paperwork, changing bank accounts, switching automatic payments, and in some cases pleading a case for wrongly damaged credit is among the giant task list of nightmarish to-dos when you’re picking up the pieces after the fact.

So what is it worth to you to try and avoid this problem altogether? Obviously, exercising due caution is easy enough to do and prudent to say the least. Don’t use a credit card or do banking over an unsecured wireless network. Be careful with your bank card and entering in PIN numbers in public places. Avoid using the same password for everything that also happens to be the name of your pet.

In this day and age, most of these techniques are relatively commonplace. But what else can you do?

Credit Reporting and Monitoring Services

Most credit agencies like Equifax, Experian, and TransUnion have a credit reporting service you can subscribe to. For between $10 and $15 per month for example, the Equifax Credit Watch program will alert you to any changes in your credit such as:

Somebody trying to open an account in your name
Credit inquiries made on your accounts
Changes in your account balance beyond user-set parameters
Even $20,000 in Identity Theft Insurance

Experian and TransUnion have similar programs here and here. Most programs encompass monitoring of all three credit bureau activities, but before you race out and sign up it would be prudent to double check. Paying a monthly fee for a service that monitors only one third of your credit history is, well, only one third as good.

Initially, it seems like a good deal, worth considering – especially for those who were once bitten and now twice shy.

But upon further consideration, I begin to question the value in the name of frugality.

Can I not hop online and check my credit balances daily (or every other day), scanning for erroneous charges?
If somebody does a credit check on me I’d like to know, but what if instead of subscribing, I periodically order a free credit report? Each of the three credit agencies usually allow one free report per year: if I timed it right I could check my credit activity every four months.
And although the Identity Theft insurance sounds handy, with a little bit of elbow grease, I shouldn’t have to pay any erroneous charges to my credit cards or account change fees once we’ve established the identity theft as the cause.

Then again…

There’s no denying the fact that simply paying the monthly fee could be easier, and may give you some more free time and well-deserved peace of mind.

Then again…

$10 here and $10 there, and you’ve blown your Latte Budget before even getting one drop of caffeine into your system.

So what is your credit security worth to you in this world of ever-increasing identity theft and credit crime? And what are you prepared to do about it?

This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: