Credit Report

Don’t Pay for Identity Protection: Here’s What to Do Instead

April 1, 2019 By Jennifer Derrick 31 Comments

Under the best circumstances, most identity protection services can only provide a few ways to prevent identity theft. That’s because the protections they offer only operate at the credit bureau level, which reports on transactions related to credit cards, loans, and mortgages. Things like obtaining fake driver’s licenses, receiving medical care under a false name, and giving a fake SSN to avoid arrest typically don’t go through the credit bureaus so identity protection services aren’t able to help.

No Identity Protection is Guaranteed

The problem with any sort of identity protection is that nothing is foolproof. Protecting yourself at the credit bureau level only works as long as the agency issuing the credit actually goes through the bureaus. If they don’t, they have no idea that you’ve put protective measures in place, and they may go ahead and issue credit to an impostor.

It’s almost impossible to protect yourself against driver’s license or medical fraud because most state agencies and healthcare providers don’t run checks at all and assume the information is legitimate. It’s also very easy for a thief to steal a credit card or bank account number and treat themselves to a shopping spree that you learn about only after you’re missing the funds. A protection service cannot stop these types of transactions. Only constant vigilance and some proactive steps on your part can help to prevent identity theft, and even then, you won’t have a 100% guarantee.

Don’t Pay to Protect Your Identity

So if it’s so hard to protect your identity, what can you do and should you pay someone else to do it for you? The answer to the second question is a definitive “No.” What most identity protection services claim to do, you can take care of on your own for free. You’ll get the same level of protection and have control over the process (and you won’t be giving out your personal information to yet another company, which puts you at risk if their database is ever compromised). As for what you can and should do, below are the four main protections that many of these services employ and how to do them yourself. Then I have some ideas that go beyond their protection.

1. Set a Fraud Alert

This is free to do. All you have to do is call one of the bureaus or visit their website and answer the questions. You don’t even have to speak to a person. The alert is then passed from the bureau you contacted to the other two — you don’t even have to contact the other two, it’s done for you. The alert is good for 90 days and lets credit issuers know that you may have been the victim of fraud and that they should request additional information or documentation before issuing credit. It doesn’t stop the issuance of credit but it does, if followed correctly by the issuer, cut down on incidents of identity theft. You can renew the alert every 90 days.

2. Remove Your Name From Pre-Approved Credit Card Offers

Contact Opt-Out Prescreen or call 1-888-567-8688 (888-5-OPT-OUT) to remove your name from pre-screened credit card offers. Contact the Direct Marketer’s Association to be removed from many junk mailing lists. The DMA is the largest database used by solicitors, so opting out with the DMA greatly reduces junk mail. Read the privacy policies of companies you do business with and find out how to let them know that you don’t want your information shared. If you get junk mail with a prepaid mailer, you can stuff their materials into the envelope and write, “Remove me from your list” on the material. This usually works, although it may take awhile. Make certain when doing business online that you uncheck any boxes that say, “Contact me with future offers,” or similar. Many websites pre-check these for you in the hopes you won’t notice, leaving it to you to opt out of their crap.

3. Order Your Free Credit Reports and Monitor Them

You are entitled to one free credit report per year from each of the three major credit reporting agencies, Experian, TransUnion, and Equifax. You get these reports through AnnualCreditReport.com and should only use this site. Others that sound similar require you to pay. But don’t request them all at once. Since you can get one per year from each service, you can request one every four months to keep a constant eye on your credit. So, for example, if you request from Equifax in January, wait until May to request one from TransUnion. Then request one from Experian in September. Then, when January rolls around, you request from Equifax again and keep the cycle going. This means you’re seeing your credit report once every four months which lets you catch potential problems quicker than if you look at it only once a year or less often.

4. Keep Important Records

Keep records of your credit card numbers, bank accounts, insurance cards, and driver’s license information (and contact information for each agency) separate from your wallet or purse. Make photocopies of sensitive items that you carry and keep them in a secure location separate from your wallet. If your wallet or purse is stolen, you can quickly contact each bank and card issuer and notify them of the theft so they can shut down your accounts and open new ones.

Other Ways to Prevent Identity Theft for Free

If you want to go beyond these services (and you should), here are other steps you can take to help secure your identity.

Use a cross-cut shredder

Shred anything with your SSN, bank account numbers, address, or other personal information. Be especially sure to shred pre-approved credit card offers and balance transfer checks. Get a cross-cut shredder or “confetti” shredder because these reduce your papers to tiny bits that are almost impossible to put back together. Some shredders make strips which are too easy for a thief to put back together.

Freeze your credit

This isn’t free, but the peace of mind is worth it. It is similar to a fraud alert except that it cannot be ignored by a lender. A fraud alert merely tells a lender that you may have been a victim of fraud and that they should request proper identification and verification before issuing credit. However, a freeze locks your credit file so that it cannot be viewed at all unless you “unfreeze” it. There is a fee to freeze your credit and another fee when you want to unfreeze it, so if you’re actively pursuing loans this option isn’t for you. Freezing your credit also means that you can’t be spontaneous about getting credit. If you’re shopping and see a great same as cash deal or want a store credit card, you’ll have to wait because you’ll have to unfreeze your credit before you can apply. Freezing and unfreezing aren’t instant — there are a few days of processing time — so be prepared to wait if you need credit in a hurry.

Don’t let your credit or debit cards out of your sight

It is common for restaurants to take your card away and run the payment at a register out of your sight. Unfortunately, some servers are dishonest and run your card through a “skimmer” that captures the card’s information so a new one can be made. Bring cash to restaurants that you know will take your card away. Also don’t let a clerk in a store take your card out of your sight. Some dishonest clerks will say they have to get manager approval of your transaction, then go to a back room and skim your card.

Be wary of ATM’s that look altered

Thieves will attach skimmers to ATM slots to capture card information and PIN’s. You may notice that the slot looks lumpy or not firmly attached to the machine, or as if there is another piece of hardware attached to the front. If it looks fishy, don’t use it. This is less likely to happen at bank ATM’s since they are more aware of the problem and may be more religious in checking their machines. However, it can happen anywhere so be vigilant.

Protect your PIN

When at an ATM, cover the keypad with your hand and do the same as you tap in the information on pads in stores. In a store, you can avoid entering your PIN altogether by running the transaction as “credit” rather than “debit.” It doesn’t change how you withdraw your money, you just don’t have to enter your PIN.

Don’t get caught by phishing scams or phone scams

You hear it all the time, but it bears repeating: Never give personal information out over the phone unless you initiate the call and never enter information into a form you reached by a link in an email. Always type the website directly into your browser and navigate from there. If in doubt, call the company that sent the email or made the phone call and ask if it’s legitimate.

Spring for an unlisted phone number

Having an unlisted phone number cuts down on the number of phone solicitations you receive and cuts down on people just pulling a phone number and address out of the book and giving it as their own. It also cuts down on some junk mail solicitors that compile their lists from phone listings.

Don’t give out your SSN unless you have no other choice

Many places that ask for your SSN (except banks or those issuing credit) will accept another identifier if you ask. Many are aware of the problems of identity theft and may be willing to work with you. If someone asks for your SSN, ask why they need it and if there is an alternative and, if you’re not satisfied with the answer, consider whether or not you’re willing to take the risk.

Don’t carry your SSN with you

Don’t carry anything with your SSN in your wallet or purse unless you are going to need it that day. If your wallet or purse is stolen it’s a pain to cancel and reissue credit cards and bank accounts, but it’s so much worse if the thief gets your SSN in the bargain. While you’re at it, purge your wallet of any credit cards, insurance cards, or other identifying information you don’t use on a regular basis to cut down on the items a thief has access to.

Protect your computer

Install antivirus and anti-spyware protection on your computer to prevent anyone from installing malicious software that can capture your personal information or transmit it to another party. Make certain websites are secure before entering personal information (look for “https” in the web address and/or a lock icon in the browser window). Don’t enter personal information when using public computers at schools, universities, libraries, coffee shops, etc. You don’t know what kind of protection, if any, they have in place.

Leave information off your checks

Don’t put your SSN, phone number, or driver’s license number on your checks. In the old days, the advice was to put this information on checks to speed processing and verification. But now this is just more information that a thief can use against you. Only put your name and address on a check. If the person taking the check requests additional information, you can give it if you feel comfortable (but don’t give the SSN — they don’t need that), but otherwise don’t give it out.

Monitor your accounts online

Many banks and credit cards now offer online access to your accounts. Take advantage of this and monitor your accounts daily or every other day to check for suspicious activity. This gives you a chance to quickly catch a thief before there is too much damage. If you only wait for the monthly statement, you may be too late.

Sign up for e-billing and e-statements

Receiving bills and account statements electronically cuts down on the chances of someone intercepting your information in the mail, either through intentional theft or in the even your mail just goes to the wrong place.

Buy a safe

Keep sensitive documents (tax returns, bank statements, passports, Social Security cards, etc.) in a safe. If your home is broken into, a safe may keep your information out of the wrong hands. Alternatively, you can rent a safe deposit box at your bank but this can be inconvenient if you need the documents and the bank is closed. And don’t keep documents any longer than necessary. Shred or burn statements, tax returns, and old bills that you no longer need.

Be careful with your mail

Opting out of junk mail and signing up for e-billing and e-statements where possible will greatly decrease your risk of mail-related identity theft, but you can go further. Don’t leave sensitive outgoing mail in your mailbox for pickup. It can easily be stolen while you’re not looking. Take it to the post office. If you’re going to be out of town, either have your mail held at the post office or have a trusted friend pick it up. Don’t let it pile up in the box where thieves can get to it. Retrieve your mail as soon as possible. If you aren’t home when the mail comes, get it out of the box as soon as you get home. Don’t leave it there overnight. You might also consider a locking mailbox. These are so mail deliverers can open and close them, but after that, you’ll need a combination or a key because it’ll reset for the next day’s delivery.

Don’t leave personal information out in the open

Each day there are more stories of contractors or delivery people who enter homes and steal the homeowners’ identities. Maybe they left their checkbook out in the open, or an old bank statement, or an insurance claim with their SSN on it. In any event, the contractor simply needs to copy the information and they’re able to steal the homeowners’ identity. If you’re having contractor services or deliveries, make certain that any compromising information is out of sight and preferably locked up. And be sure to keep an eye on the people who are in your home.

Bottom Line: You Don’t Have to Pay for Protection

Yes, you can pay a service to do some of these things for you, but if the protection you’re paying for is no better, or possibly worse, than what you can do yourself for free, why pay for it? Taking some simple steps and using some common sense can go a long way toward protecting your identity. There is no guarantee, even with companies that charge you for protection. If you’re the victim of a particularly savvy or determined thief you may still have your identity stolen. However, if you are proactive about protecting yourself, you’ll be able to identify potential problems sooner than if you do nothing.

Have you had your identity stolen? Share with us in the comments below.

Why You Should Check Your Credit Report and Credit Score

June 18, 2018 By Jeff Hoyt Leave a Comment

Why Check Your Credit Report and Credit Score? Why Wouldn't You?

Sometimes people ignore important warning signs – such as a stop sign, the expiration date on their yogurt, or that rapidly spreading rash. You might ignore those signs and come out okay, but why take that chance? Your credit report and credit score act as similar warning signs for your financial health. Ignore them at your own risk.

Your credit report contains your collective credit history as well as your current credit activity. Lenders use algorithms that distill all that information into a single credit score for ranking purposes.

Low Credit Score

A low credit score tells potential lenders that it’s risky to lend money to you. You may not qualify for a credit card or a mortgage loan, or you may have to pay higher interest rates if you do qualify.

You may not get the best offers for life insurance, cell phone plans, or other services where a credit check is required. A low credit score could even contribute to being turned down for an apartment or a job.

If you always make payments on time, why should you bother to check your credit score? You should check it because it’s possible to be responsible with credit and still have a low credit score.

Not Enough Information

If you don’t use credit very often, your credit file may not have enough information for lenders to decide whether to extend credit to you when you really need it – even if you make all payments on time when you do use credit.

Mistakes on your credit report could also give you a lower credit score than you deserve – for example, payments incorrectly listed as late.

However, there’s one overwhelmingly important reason to check your credit report – fraudulent use of your account.

Identity Theft

With all the security breaches and hacks in recent years, there’s a decent chance that identity thieves have access to your personal information.

Thieves could create entirely new credit accounts in your name, run up huge charges, and leave you to make payments.

If you don’t regularly check your report for unauthorized charges or new accounts that you didn’t create, you may not know about them until bill collectors come in search of payment.

By then, your credit score could be ruined, and you’ll spend months straightening out the mess.

Monitor Regularly

By monitoring your credit score regularly, you’ll notice the factors that make your score rise and fall. This will help you quickly spot trouble.

If your score suddenly drops without any valid reason – such as a large credit purchase that pushes you close to your limit – you know that you need to check your credit report as soon as possible.

The five main factors that make up your credit score are:

Payment history;
The percentage of your available credit that you’re using;
The age of your credit accounts and the length of time since each account was last used;
The mix of active credit types that you have;
And the amount of new credit you are applying for.

Best Scores

For the best credit score, you need to make all your payments on time, use a small amount of available credit, maintain accounts and use them regularly, have a suitable mix of credit types, and limit applications for new credit.

Now you have no excuses. You know what affects your credit score. You know the importance of monitoring your credit score for unexpected drops and checking your credit report for mistakes or signs of fraud. You have the free resource to make these checks.

Set up a regular credit-monitoring plan and stick to it – and watch out for life’s other warning signs as well.

You may be able to ignore stop signs, icky rashes, and ugly credit reports for a while, but eventually you’re likely to face unpleasant consequences. And remember: Life’s too short for yucky yogurt.

This article was provided by our content partners at MoneyTips. Photo ©iStockphoto.com/HbrH

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Credit Karma Targets Consumers with No Credit Score

May 5, 2015 By Jeffrey Strain 2 Comments

Credit Karma ffers information to those with no credit score

There are about 15 million people who don’t have a credit score, and Credit Karma wants them to visit their site as well. Although it may seem somewhat ironic that a website which made its name by giving people free credit scores without having to hand over their credit card number would now want to help people who don’t have a credit score at all, the reality is it makes a lot of sense. Credit Karma has expanded their services to also give out two types of free credit reports and with this expansion, it makes more sense that they would want to help consumers who have what the industry calls “thin files” — those people who don’t have a credit score because there isn’t enough credit history and information to calculate a score.

If someone didn’t have enough information in their file to create a credit score in the past, those trying to use the site would be informed of this, and told they would receive an email when there was enough information for them to have a credit score. That is no longer the case. Those who sign up with Credit Karma will be shown their current credit report even if there isn’t enough information in it to produce a credit score. In addition, they will get information explaining why they currently don’t have a credit score, along with steps they can take to begin creating a credit history to get a credit score.

Credit Karma obviously sees this as an excellent opportunity to beef up their bottom line. Consumers who don’t have a credit history can be quite lucrative to a company like Credit Karma, since it can be easier to convert them on offers the site provides. This means the site can recommend credit cards and other types of loans which can help to build credit, which is how they make money. This gives Credit Karma more opportunities to get consumers to adopt products because thin file consumers don’t have to be convinced to switch from a product they already have.

Credit Karma isn’t the only one who understands that thin file consumers need more access to a score. FICO has a new credit score aimed at those potential borrowers who have thin files by taking into account bill payments that aren’t normally used for credit scores such as mobile phone, cable TV, Internet, and utility payments. The FICO Expansion Score takes into account your bill paying history to form a credit risk score.

For those who don’t have enough information in their credit history to currently warrant a traditional credit score, understanding why they don’t can be an important step toward making a decision of whether it’s worth it for them to get one. Since there are a lot of compelling reasons to have a good credit score rather than none at all, including it allows you to save a lot of money,

Common Ways Errors Get on Your Credit Report

April 15, 2015 By Lilian Nwa 3 Comments

The following article was created in conjunction with Credit Sesame through Kasai Media.

We expect certain information to be infallible; however, such an expectation could prove financially fatal especially as it pertains to the veracity of credit reports. According to the Federal Reserve, a credit report is a record of an individual’s credit history that includes his or her identity (e.g. name, address, date of birth, full or more often partial Social Security number, and possibly employment information), existing credit, public record as well the companies or individuals who have previously requested a copy of the report.

This information is commonly generated by one of the three major credit bureaus — Equifax, Experian and TransUnion. Lenders, insurers, employers and others then use the generated report to assess an individual’s ability to manage his or her financial responsibilities as defined by a 3 digit score ranging from 300 to 850 where 300 indicates you’re considered unlikely to repay loans and 850 is considered likely to repay loans. Unsurprisingly, an individual’s credit score determines the loans he or she can qualify for and subsequently the interest rate to be paid to lenders. Indeed, poor credit can prevent a person from purchasing certain essentials such as living quarters or a car.

Given the significance of this report, it is surprising how disturbingly likely it is for mistakes to appear on an individual’s credit report. In particular, the problem arises when the three mentioned credit bureaus scour records to find information about individuals that can be entered into mathematical algorithms to spit back a credit score. Unfortunately, as Chi Chi Wu of the National Consumer Law Center explains to The Huffington Post, credit bureaus often use a partial name match or only seven of nine digits of an individual’s Social Security number in order to determine what accounts belong to a person.

In his words: “They do this because they want to make sure that every account associated with a consumer gets included.” However, issues arise when identities are mistakenly matched. “This frequently happens with family members who have similar names and similar Social Security numbers, or especially with the father/son, junior/senior-type issue,” Wu continued.

Why don’t credit bureaus match entire names or Social Security numbers? As Susan Shin of the New Economy Project said, “They err on the side of giving too much information [to lenders], even if it’s not accurate. The bureaus’ real customers are lenders, like the banks, and seeing all potentially negative information about a person could give banks an excuse to charge that person a higher interest rate.”

Beyond this supposed malfeasance, errors can also appear because of deliberate identity theft in which a person assumes your identity and you assume their debt. There are a number of steps you can take to help prevent this from happening, and you can also get free identity theft insurance to help if ID theft does occur.

Beyond identity theft, if an individual is divorced, credit information from his or her former spouse can sometimes wrongly appear on a credit report. Another common way errors appear on credit reports is when delinquencies have been resolved, but credit-reporting agencies fail to report these resolutions. These types of mistakes can generally be categorized as consumer errors (the errors an individual can make filling out applications), furnisher errors (the errors made by companies reporting to credit bureaus) or credit reporting agency errors as discussed above. Together, these inaccuracies add up to create a situation in which errors are more likely than we’re taught to believe. In order to ensure the accuracy of an individual’s credit report, experts suggest that one should review their credit reports at least once a year.

(Image courtesy of Nick Webb)

The Best Way to Manage Your Finances

December 22, 2014 By Lori Kelley Leave a Comment

We are often tempted to look at the various aspects of our financial lives in isolation, but taking a holistic approach is much more effective. Instead of looking at your credit score, family budget and retirement savings in isolation, consider how everything fits together to create a financial whole.

If you want to save more money and get out of debt, your credit score is an excellent place to start. Your credit score provides a kind of snapshot – a look at how you are doing and what lenders see when they look at your file. If your credit score is among the highest, that is a good indication that your financial life is under control. If your score is on the low end of the spectrum, you may need to reevaluate what you are doing and look for ways to improve your financial life.

A good place to start is a company that specializes in providing accurate credit scores to real consumers. A site like the Top 10 Credit Report website allows you to compare features of the top credit report providers, so you can find the service that best meets your needs. You also have access to reviews, so you can see how others like the service before you sign up.

Knowing your current score gives you a place to start and a goal to shoot for. Your credit score is important, but it is also part of a larger overall picture. To improve your credit score, you will need to look at your relationship with money, from how you earn it to how you spend it.

One of the most effective ways to improve your finances is to pay yourself first and make saving money a priority. If your checkbook is nearly empty at the end of the month, turn things around and fund your savings account first. You will be forced to live on what is left, and that will force you to make smarter spending choices.

Paying yourself first pays off in a number of ways. Perhaps most importantly, it forces you to live on less than you make. Whether you send 1% of your pay to the emergency fund or 10% to your retirement fund, you are forced to make do with what remains of your paycheck. You might think you do not have a penny to spare, but you will probably find that is not true.

The pay-yourself-first strategy is also a great way to build for the future, something you may have had trouble doing. If you have a 401(k) plan at work, you can start with as little as 1% of your paycheck. Since the money comes out on a pre-tax basis, the hit to your take-home pay may be less than you feared. As you get more comfortable with the process, you can ramp up your investments and save even more.

At first glance, you might not think that the pay-yourself-first strategy would have much of an influence on your credit score, but you might be pleasantly surprised. Implementing such a strategy is an excellent way to instill financial discipline, and that can help you stick to your monthly budget. When you know where your money is coming from and where it is going, you will be less likely to pay your bills late or miss paying them altogether.

Since a history of on-time payments is one of the best ways to improve your credit score, getting a handle on your finances is sure to improve your standing. Improving your relationship with money and learning how to handle it wisely will improve all aspects of your financial life, from your ability to buy a first home to saving enough money to retire in style.

Taking a holistic approach to managing your money is not always easy, especially if your short-term goal is to raise your credit score. Some people turn to tricks and questionable tactics to raise their scores, but that will not be effective over the long run. If you truly want to improve your credit score, start with a service that compares the features and services of various credit report providers. Armed with your credit score, you can make the changes necessary to improve your finances and your relationship with money.

Credit Karma vs Quizzle: Which is Better for Free Credit Scores and Reports?

September 22, 2014 By Lori Kelley 16 Comments

Credit Karma and Quizzle: whihc is the better free credit score company?

There are so many websites out there that promise free credit scores and free credit reports. The problem is many of them walk the tightrope of being scams, and only a few of them tend to deliver on their promise. Credit Karma and Quizzle are two credit reporting websites that, for the most part, actually delivery on their promise of no cost credit scores and reports. While both deliver, they aren’t identical, and there are a few differences which exist between them.

What is Credit Karma?

Founded in 2008, Credit Karma is a website offering free credit and financial management services. The site provides free credit scores, free credit reports, and credit monitoring from TransUnion. When you visit this website, you can access your TransUnion credit score and reports at no cost. All the services offered at the site are completely free, and there is no need to pay or give your credit card to access any of their services. They are a legitimate site offering a solution to allowing you access to credit score and reporting.

What is Quizzle?

Just like Credit Karma, Quizzle was also launched back in 2008. Quizzle is also in the business of offering consumers information regarding their credit score and their credit standing at no cost. The site also doesn’t require a credit card or any other form of payment to access the services they provide. They are a legitimate company which offers consumers free access to their credit score and report.

What is the difference?

One can’t help but ask what are the differences between Credit Karma and Quizzle. The most significant difference between the two is the credit agency they use to create your score and report. Quizzle makes use of the credit agency Equifax, while Credit Karma makes use of the credit agency TransUnion. Since each of the three credit reporting agencies (Equifax, Transunion and Experian) are different, what their scores and reports contain can be different from the others.

Another difference between Credit Karma and Quizzle are the types of credit scores each provides. Of the two, Credit Karma offers consumers four scores (TransRisk Score, TransUnion Home Insurance Risk Score and TransUnion Auto Insurance Risk Score and VantageScore) while Quizzle only offers the VantageScore through Equifax. All these scores from both companies are FAKO scores.

Both companies also offer free credit reports, but again, these are from different credit reporting agencies. Consumers get their credit report from TransUnion when using Credit Karma, and it can be accessed as often as once a week. Consumers get a report from Equifax when using Quizzle, but can only have access to it every 6 months.

Of the two companies, Credit Karma is generally regarded as having the better combination of credit tools and access to the scores and reports, but a lot depends on the consumer’s individual needs. It also depends a lot on which credit bureau they want to see the information obtained from (Experian free credit score information can be found at Credit Sesame). While in general terms the two companies appear to be almost the same, there are some key differences which favor Credit Karma over Quizzle for many people.