Credit Monitoring

Monitoring your credit is necessary but time-consuming, the FACTA act made great efforts in ensuring that consumers have access to their credit reports for free once a year from each of the credit bureaus, and yes this is better than none, but it simply is not frequent enough to give consumers plenty of alert to take action against credit fraud and other types of identity theft.

Other financial experts recommend that you check your credit report twice a year, but ideally you should do it once every quarter. Especially if you’re actively using credit and if anyone other than you has access to your social security number, then the bottom line is you really need to be monitoring your credit as often as once each quarter.

Credit reports are updated once a quarter by the credit bureaus but updates can be recorded anytime especially if there’s a lot of  activity, like credit inquiries, new accounts, or negative entries.

Employing credit monitoring services in general means that you have your credit report monitored for you on a regular basis, and you get alerted via email, phone or letter about any changes to your credit history.

Credit Monitoring: The good and the bad

There are those who do not consider these services worthwhile and those who feel it is essential to your overall credit health. Yes you can monitor your own credit with some effort, and depending on how often you plan on doing it, you’ll need to request a copy of your credit report from each of the credit bureaus individually and pay each for the report.

Doing it yourself is less convenient and you get no alerts. For around $10 a month most credit monitoring services will include a number of benefits to include a service warranty and resolution assistance should anything happen. You won’t get any of these benefits by monitoring your own credit files.

If you can do without the additional benefits then for around $10 to $15 dollars you can get each of your reports each quarter and review your accounts. So it really is a matter of do you want to do the foot work yourself?

Why is it that credit bureaus can gather such a great amount of information about you and sell it? Don’t you have a say in how your information is handled or whether it should be handled by anyone at all? There are reasons why your name and social security number have a credit file, this really does make things easier when you apply for a mortgage or a car loan etc. In today’s economy there’s a significant need for credit and an organized system for reporting it. But your identity does not belong to you in the sense that the collected information is in fact the property of the credit bureau that gathered the information.

There are more than 1,000 local and regional credit bureaus around the country (US), the three major ones are Experian, Equifax and TransUnion. All of which collect and record information reported to them by your creditors, banks, credit card companies, private lending institutions etc.

Yes they sell your information to third parties and this is profitable for them, and those third parties may resell or share that information with other business partners who then pre-approve you for dozens of credit offers each year and add you to their mailing/distribution lists to send you stuff you don’t really need.

Why this puts your identity at risk?

The trading and exchanging of personal consumer information is risky business, for the consumer that is. Those who obtain your information from the credit bureaus could mishandle your information and expose you to a hacker. Unfortunately this is simply the cost of doing business.

Credit bureaus are private companies with a business that’s regulated because it involves a certain degree of risk for the information owner. Those regulations do not yet do enough to protect consumers however. Hey cigarettes and alcohol are dangerous also, but they’re not going to stop selling them are they? As long as they’re regulated and the producers pay federal taxes, all is well.

Do you have any say in this?

Luckily yes. You can request a credit freeze. Sometimes known as security freeze, prevents a credit reporting bureau from releasing your credit report and stop inquiries and subscriptions on your account without your consent. You can request a credit freeze from each of the credit bureaus, and typically you’ll be provided with a personal identification number and/or password if you ever want to remove it.

The most immediate advantage of placing a freeze on your credit report is to stop releasing your information to those who intend to market to you. But you must also know that by placing a credit freeze on your file you’ll stop your own self from being able to get credit, apply for a mortgage or a car loan. If you can live without those things and simply want to take control of your identity now, then a credit freeze will work great.

This mostly applies to the 3 major credit bureaus, other companies that gather information about you must be contacted individually and there could be hundreds of them. They can still trade your information and continue to send you junk mail and credit offers if they already have you on file. The freeze only stops the bureaus from further releasing information about you.

One way to address your information already being available is to either use credit monitoring or identity theft services. Although you can do much of what these services yourself, it will prove time consuming and burdensome to tackle this task on your own. Definitely something to consider.

The risks of credit fraud and identity theft are always present. From phishing scams, to spyware and the lack of proper security implemented by companies that handle consumer personal information, the odds are against us. In 2009 there were over 400 security breaches reported to the FTC and in 2010 there are 17 so far. These breaches expose consumer information in volumes and each day more and more people are discovering that they’ve been victimized by an identity thief.

The number of threats consumers face today are astounding, what’s worse, once the scam takes place, the victim may not notice the theft until months later. So what can you do to ensure your personal information stays safe?

One of the first steps to get started is to monitor your credit report. Your personal credit files are kept by the 3 major credit bureaus in the US. The information they record include:

• The companies that granted you credit
• Third parties that have made credit inquiries about you
• Third parties that have reviewed your credit
• Payment and timeliness information (payment history)
• Past addresses for the last 10 years.
• Jobs you’ve held in the last 10 years

Guidelines for monitoring your credit:

Keeping track of your credit report and what appears on it regularly, will prove a huge benefit and a great way to stay ahead of identity thieves. Here are some guidelines to be most effective.

1. Check all 3 of your credit reports: You’ll find that there are significant gaps and differences in how your credit is seen by each of the major bureaus. A certain account might show in one but not the other, so it’s essential you compare information across all three reports.
2. Monitor your credit reports quarterly: You can check your credit free once a year, and although that’s better than nothing, it isn’t frequent enough to detect fraud and stop the damage. Checking your report once every quarter is the most ideal way to keep on top of what’s going on with your personal credit file and catch identity thieves and stop credit fraud before it becomes a bigger problem.
3. Look for suspicious activity: When reviewing your credit report you’ll notice and recognize accounts that are familiar to you, like your Visa card from Chase, or that car loan you’re still paying off. Your job is to take a close look at every single account reported on all 3 of your credit reports and find anything that looks suspicious or inconsistent when compared to your other reports. Look at inquiries made and find out who they are and why they’re inquiring about your when you have not recently applied for credit.

Keeping on top of it proactively and consistently is the most effective way to keep safe from credit fraud and other identity theft threats. However, it may seem a little inconvenient and time consuming, if this is you, consider credit monitoring services or full blown Identity Theft Protection services.

These automated systems will alert you automatically when changes to any of your credit reports occur, and depending on which service you sign up for, the coverage can be very sophisticated and certainly takes the burden of your hands.

How to protect your credit:

Taking a proactive and consistent approach to protecting your credit means understanding and accepting the responsibility for it. Making payments on time and never cutting corners or compromising when it comes to the security of your credit cards, bank accounts, and every other aspect of your personal identity.

These points may sound obvious but are often ignored by consumers, and it is when we let our guard down that we create chances for identity thieves to take advantage of our smallest mistakes to earn themselves a big payday. Protecting your credit involves a significant time investment from you, but is is part of the responsibility of being issued credit.

Minimizing the Risks of Fraud

Credit card fraud is one of the most common and most lucrative crime trends. It’s also one of the easiest to do and get away with, and the hardest to detect without the proper credit monitoring in place. Identity thieves are opportunistic and use phishing, skimming, and dumpster diving as methods of digging for key pieces of information such as your social security number, credit card numbers, csv verification numbers and anything they can use to either abuse your existing credit accounts or open new ones under your name.

Victims of credit fraud are often left with the daunting task of restoring their credit and their good names at a significant cost of both time and money. Here’s how you outsmart the scammers and minimize your risks for credit fraud.

1. Pay close attention to your billing cycles – contact your credit card company or bank if your statements do not arrive when they should.
2. Watch out for mail fraud – redirecting mail is very easy to do, know when your statements should arrive and do your best to secure your mail box with a lock. Never leave mail unattended and use a cross-cut shredder to destroy junk mail that contains your personal information.
3. Password protect everything – take advantage of additional security features offered by your credit provider or bank, such as password protection. Many people often see these extra steps as a burden rather than a benefit and this is letting your guard down.
4. Protect your personal information – you need to be cautious about who you give your information to, always know who you’re dealing with. Phone, email and snail mail phishing scams are still around because they still work, millions of people in the US fall victim to these each year.
5. Leave your SSN card at home – it’s a common habit to carry everything you may one day need with you in your wallet, it’s also a big mistake and an easy way to lose a lot of critical personal information at once. Your SSN is one of the most valuable pieces of information an identity thief can get their hands on, it means an easy pay day.
6. Shop securely online – when shopping online make sure you’re only doing it on secured sites. Make sure the address starts with https:// and look for the lock symbol somewhere in the footer of your browser, or the SSL (secure socket layer) text somewhere on the page.
7. Consider credit monitoring and/or identity theft protection – protecting against credit fraud and identity theft isn’t a fun job at all. The most convenient and practical way to protect your credit is to automate the process with these services. It’s instant peace of mind.

Credit monitoring services are a simplified version of identity theft services, where your credit cards, debit, share check, and bank accounts get closely monitored. It’s always best to assess one’s own information and lifestyle to properly come up with a good decision as to whether to opt for credit monitoring alone or full blown identity theft services.

The FTC reports that it can take up to 6 months and in some cases up to 12 months for a victim of identity theft to take notice that their credit card information has been used by someone else. The harshest of all notices is being contacted by a bill collector about unpaid charges made by someone else.

Credit monitoring services are designed to alert the credit owner on a daily or weekly basis when credit changes occur in your credit reports. Be it a new credit account, mortgage or any information considered critical, it’s nice to have that heads up that something important is taking place and you should take a look.

Credit monitoring won’t prevent someone from using your social security number or medical benefits in any other ways. This type of service can work well for someone who is just getting started with building their credit or rebuilding their credit. If you never provide your social security number to anyone, chances are this service will work just fine for you.

Your reports should provide detailed information from all three credit bureaus, having a 3 in 1 credit report is best, because it provides the highest level of detail about your credit history.

You should clearly see details about your monthly payments, credit lines opened or closed, active loans, paid off accounts etc. All this information including your current address and past names used, are considered your credit history. When you activate your credit monitoring service whenever this information changes from either bureau you are notified.

What are the best services? Many of the identity theft protection companies like Trusted ID and LifeLock offer credit monitoring as part of their overall service. However IdentityLookout.com by Experian and FreeCreditReport.com are two of the most popular and widely used services with a long history of successful credit fraud prevention for their clients.

In order to get started you will need to visit either one of the providers above, where you’ll learn more details about their programs, then enter their secure portal where you’ll provide personal information that will allow them to begin gathering information about you. This process may take a bit long but it’s absolutely necessary in order to get started correctly.