Your credit history has never played a bigger role in your life than it does now. Of course, you know that a good credit report is essential for getting a loan at the best possible interest rate. But these days, your credit report will also have a bearing on whether you get hired for a job, can rent an apartment, or acquire auto insurance. It even drives the premium for your homeowners insurance. That’s why it’s never been more important to take charge of your credit history.
The highly-publicized breach at first Target, then Neiman Marcus, highlights the role that a credit report can play as an early warning that your identity has been stolen. Here are some strategies you can employ to protect yourself and your credit history.
Examine Your Credit Report
Under the Fair Credit Reporting law, every credit rating agency must provide the individuals it rates with a free annual credit report each year so that you can double check it for accuracy. That’s important because errors often creep into our reports and can have a detrimental effect on our rating. Even more important in this era of identity theft, keeping a careful eye on our credit reports can alert us that our identities have been compromised.
The three major credit rating agencies – Experian, TransUnion and Equifax – will allow you to request a free report from their web sites once a year. Or submit your request to each from the FTC-authorized web site www.annualcreditreport.com. From this site, your annual report is free, but beware, however, if you find yourself on a web site that requires you to pay a fee to access yours. You’ve inadvertently accessed one of the many web sites that exploits consumer confusion over their rights to charge unnecessary fees for viewing their credit report.
If you spot activity on your report that isn’t yours – new accounts opened in your name or transactions on existing accounts you’ve haven’t made – then take action immediately to alert both your lenders and the credit reporting agencies that your identity has been stolen and fraud has occurred.
Each one of your lenders will have a fraud alert protocol listed on their respective websites. The same is true for the credit reporting agencies. Don’t delay. If you suspect fraud, the faster you take action, the quicker the criminals can be stopped from using your good name.
If you’ve discovered that your identity has been stolen, you can ask the credit reporting agencies to put a fraud alert on your account. Unfortunately, a fraud alert is a rather weak defense, because it only requires that any potential creditor verify your identification before granting credit. Most creditors will simply phone the applicant and ask for verification, a very easy step to overcome by a determined crook.
That’s why you may want to take an additional step and put a security freeze on your account. It will cost you a small fee, such as $10 per reporting agency, and $10 each time you want your credit report to be released, but the added protection may well be worth it. That’s because a security freeze locks up your data so that no one can access it.
The good news with this tactic is that no one will be able to use your personal information to create a new account in your name. But it won’t help if someone has stolen your existing credit card information.
When in doubt: change your passwords for online access to your accounts; change your pin numbers; set up transaction alerts with your lenders to notify you of any activity; and lastly, request new cards with new account numbers.
Copyright DMG Financial