Identity Theft and the Importance of Monitoring Your Credit
With so many financial transactions being performed online over the internet these days, there are ample opportunities for those with nefarious intentions to usurp your identity, run up huge bills, and ruin your credit score. Since your credit score is a vital part of your financial well being and can dramatically impact your life for years to come, it is crucial that you keep close tabs on it. Your credit score affects much more than loans and credit cards, it can also affect employment opportunities and how much you pay for insurance.
Another reason to monitor your credit is the time and expense that it takes to repair your credit after your credit has been compromised by identity thieves. Some estimates put the average amount of time spent by victims to restore their credit at over 600 hours. If time is money, this is a huge expense.
It is a good idea to periodically check your credit report and obtain your credit score. Your credit report contains your current credit information, such as account balances, payment history, and who has been inquiring about your credit. You are allowed by law, one free credit report per year from each of the 3 large credit reporting agencies, Experian, TransUnion, and Equifax. An easy way to do this is to go to www.annualcreditreport.com which links to each of the 3 credit reporting firms. Make sure you go to this site for a free credit report and not to the one you see on television all the time with the catchy little songs, as this site will charge you for a credit report and also try to sell other products to you. Since you are allowed one free report from each agency every 12 months, we recommend visiting the site and putting the 3 agencies in a rotation, so that you request your report from a different firm every 4 months. One way would be to use Experian in January, TransUnion in May, and Equifax in September, and repeat the process each year.
Each of these sites will provide you with a free credit report, but they will charge you around $9.95 to give you your FICO score. This is a number which is based on a formula from the information obtained from the credit score. It’s the number banks often use to determine the interest rate they will charge you for a loan. The score can range from 350 to 850 and the higher your score, the more favorable loan terms you will generally receive.
You do not necessarily have to buy the FICO score, but it is important that you thoroughly review your credit report to look for possible errors or accounts that do not look familiar. You can then start the process of getting things corrected. If there are accounts that look unfamiliar, determine if they are actually yours. If there are indications that someone may be attempting to steal your identity to open fraudulent accounts, you can take action to stop it. If you do find anything that looks suspicious, the sites will tell you what you need to do to get things corrected.
You can also, leave the process of monitoring your credit and preventing identity theft to a firm such as Lifelock or Zander who will, for a fee, monitor your credit for identity threats. On the chance that you become a victim of identity theft while under their protection, they will take care of the repair process for you.
We highly recommend that at a minimum you check your credit on a regular basis. For even more peace of mind, consider enlisting the services of an identity theft protection firm. Like medical issues, early detection of credit and identity problems is often the key to far less pain down the road.