Here are some options to help protect your credit…
When a company requests your credit report, the request is approved immediately. No one cares about who is making the request or why they’re making it. This means thieves can easily ruin your good name if they can obtain the identifying information that is required to open an account. Consumers have a number of options to prevent people from destroying their credit and their financial futures. Each method has pros and cons and provides different levels of security. Here are the primary choices:
Credit Freeze
A credit freeze prohibits your credit files from being accessed by potential creditors or insurance companies, preventing identity thieves from opening new accounts in your name. This prevents most identity fraud since lenders generally refuse to issue credit without first seeing a credit report. Temporarily ‘thaw’ your credit by using a PIN that only you know. While not one-hundred percent fail-safe, it is highly effective at protecting your credit.
A credit freeze doesn’t prevent lenders who don’t look at your credit report from issuing credit. Unfortunately, a credit freeze also does not prevent an identity thief from using your existing accounts, your existing personal information, or open non-credit checking accounts. Firms you currently have a business relationship with will be able to pull a report despite the freeze.
- How to Sign Up: Consumers will need to send a letter by certified mail – return receipt requested – to each of the three major credit bureaus to place a freeze, which will be in place in one day. Unfreeze by written notification that can take up to three days.
- Cost of Service: Fees, varying by state, can range from free to $10 per person for each bureau to place, temporarily lift or permanently remove a credit freeze.
- Best Suited: Anyone who is worried about identity theft and who isn’t likely to need any new credit. If you are a victim of identity theft, it is most likely prudent for you to request a credit freeze with the three major credit reporting agencies, as this will limit the damage to your existing accounts.
Credit Monitoring
Receive an alert, typically by email, when something changes in your credit files.
- How to Sign Up: Contact the major credit bureaus, Equifax, Experian and TransUnion.
- Cost of Service: Monthly fees range from $4.95 to $14.95.
- Best Suited: Consumers who want to keep an eye on their credit and are still actively applying for credit.
Fraud Alert
There are three types of fraud alerts – initial 90-day, extended and active duty – that will indicate to anyone requesting your credit file that you may have been a victim of fraud. A special message on your credit report will require lenders and merchants to verify an applicant’s identity to open a new account. When you or someone else attempts to open a credit account in your name, increase the credit limit on an existing account, or obtain a new card on an existing account, the lender will takes steps to verify that you have authorized the request. If legitimacy of the request cannot be verified, the request will not be approved.
- A general fraud alert remains in effect for 90 days. A fraud alert of any kind put into affect at any of the credit bureaus automatically initiates an alert at the other two.
- An extended fraud alert requires a police report identifying you as the victim of identity theft and will remain active for 7 years; it requires that any creditor verify the requester’s identity by calling a designated telephone number or another reasonable method of contact. The consumer’s name is removed from marketing lists for 5 years, which the bureaus sell to lenders and insurance companies for use in solicitations.
- Active duty alerts are for military personnel, including reservists, who are active at other than their usual station. Once a request for an active duty alert is approved, it will become part of the credit report for a 12 month period. The consumer’s name will be removed from marketing lists for 2 years. Lenders must use reasonable policies and procedures to determine that any request is made only by the authorized consumer.
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