So you’re afraid of unwanted activity on your credit report—who isn’t? Or, you’ve already noticed some. What is the best way to protect your name?
The two main ways to flag your account is by issuing a fraud alert or a credit freeze. But which one should you use?
A fraud alert is simply that—it alerts creditors that you are trying to protect yourself from fraud, and it does not affect your current credit. It protects you from credit applications that are made without your authorization. It makes the creditors take one more step, in that they must confirm your identity (routinely done by personal contact at the phone number you provide), before issuing new credit or bank accounts. This way, they contact YOU and no one else before opening an account in your name.
So, say Joe Shmoe got a hold of your information and tried to open a new interest free credit card at Electronics ‘N More. You’ll get a call asking for confirmation. This way, you may know the exact moment the activity is being done, where, and by whom, and can instantly alert the authorities with a better shot at success than if you just find the information on your credit report—after all has been said and done.
Of course, even when you apply for your own credit, you’ll be called as well. But at least this time you can confirm that it is indeed you that is applying for credit and NOT Joe Schmoe!
Fraud alerts expire after 90 days, so if you want to keep one continually on your account, you’ll have to renew it every three months. Or, if you sign up for an identity protection service, such as LifeLock or TrustedID, they will handle this for you and keep it renewed until cancellation of their service.
Alternatively, you can place a credit, or security freeze on your accounts. This, unlike do it yourself fraud alerts, costs money, generally around $10 per credit reporting agency though it does vary by state. Some states have even made it free for identity theft victims who have a police report proving they are indeed victims.
Credit freezes previously involved writing a certified letter with your personal information to each agency requesting that this freeze be placed, lifted, or removed but the bureaus are starting to allow this to be done online (please see each of their personal websites for specific information regarding placing a credit/security freeze, as each company’s policy is different). All credit bureau sites are listed in our identity theft resources section. We suggest using certified mail to send any valid identification that is requested by the credit bureaus. You may also want to look at TrustedID as they have an add-on service to their regular offering that allows you to freeze and unfreeze your credit at all three bureaus from a single interface. An additional charge that varies by state applies.
Remember when placing a freeze, it also keeps YOU from applying for additional credit. So if you place a freeze, don’t expect to run to Electronics ‘N More and open a credit account, as you will quickly be denied due to the freeze. Utilities, landlords and employers often need access to your credit file as well so this service is definitely not for everyone. Credit freezes are suggested for people who have moved passed the point where they need credit, like seniors, or people who are currently under attack by an identity thief.
So how do you remove it? You will have to contact each credit bureau and pay them again to remove or lift the freeze temporarily. Be expected to give out all your personal information again to identify yourself—they want to make sure it is you, and not someone else, trying to remove the freeze. Keep in mind that dealing with the bureaus can be a frustrating experience as they are not known for their customer service.
The only other choice some consumers may want to consider is credit monitoring. Credit monitoring services can be an effective identity protection tool but they are not pro-active like fraud alerts in that they only notify you after the fact that you have become a victim. Unlike fraud alerts and credit freezes they do not stop identity theft, they just make you aware quickly so that you can start cleaning up the mess immediately. Many credit monitoring services do come with identity insurance, which is a great benefit, just make sure that the company you choose monitors all 3 credit bureaus or you may be unaware of an identity theft attack that does not propagate to the bureau that is monitoring your credit.
What’s best? It depends on your wants and needs. If you just want to make sure that creditors take the extra step to verify your identity, then place a fraud alert and renew it every 90 days. But if you notice suspicious activity already, or don’t plan on applying for any credit, jobs, rentals or loans, feel free to freeze your credit to keep anything from happening to your personal data. Remember though, a credit freeze is still not full proof and though access to your credit report will be blocked to companies you do not currently deal with, existing creditors will still have access. In this way an identity thief can still trick existing creditors such as your bank to extend further credit to them. Keep in mind though that freezes and do it yourself fraud alerts don’t have the additional benefit of identity theft insurance.
The alternative is to have an identity protection service do the work for you for a minimal charge. It’s a small price to pay for peace of mind and they offer other services not included with a credit freeze. Most identity protection companies also monitor black market internet sites and databases to stop potential leaks or the buying and selling of your information. They also order your free credit report and remove you from pre-approved credit cards and junk mail lists. Additionally, they provide you with identity theft insurance which is extremely important since, irregardless of your identity protection choice, there is no such thing as full proof identity protection.
Whatever you decide, remember to take action. Often with our busy lives we forget to follow through and identity theft can be such a horrific experience that you don’t want to let this task slip through the cracks. Educate yourself on the four options available – credit monitoring, credit freeze, fraud alert company or do it yourself fraud alerts and credit reports – and then take action. Though some are better than others the only bad choice is to sit idly by waiting to become the next victim. Protect yourself and your family from identity theft today.