Identity theft is more than a hassle. It can take a monumental amount of time to straighten out; at least temporarily devastate your personal finances; and create extreme emotional stress. Your best defense is a good offense so my recommendation is for you to establish your own ‘first alert’ system by doing the following:
Order and review your free credit reports each year at annualcreditreport.com. Each of the three credit reporting bureaus must provide you your credit report for free once every twelve months. You can also request your free credit report by phone:
Equifax: (888) 766-0008
Experian: (888) 397-3742
TransUnion: (800) 680-7289
Instead of ordering all three at once, order one now, one in four months and the last one in eight months. That way you’ll get three detailed reviews throughout the year. Set this process up as a recurring ‘to-do’ on your electronic calendar. Take the time to review your entire report and look for any inaccuracies. If you find an unfavorable inaccurate notation, write the credit bureau and explain why it should not be on your report and provide and supporting documentation.
Monitor credit cards. It’s pretty easy to go online daily or a couple of times per week to view your credit card activities. This takes only a couple of minutes and will quickly alert you to charges that you didn’t make. The good news is that fraudulent credit card charges can be handled quickly and shouldn’t cost you a thing but fast reporting makes life much easier for you and the credit card company. Within the past twenty-four months, I had two fraudulent charges on my credit cards for over $1,000 each. I simply called the credit card company and they removed the charges before my billing statement arrived. You can also place email or text ‘notifications’ for any charges over a certain amount. I set mine at the lowest allowed limit ($20) and I receive a text anytime there are charges over that amount. The text even displays the name of the company making the charges. I set this up online at the company’s web site.
Monitor your bank and brokerage accounts. As with credit cards, check your account activities every couple of days. You should be able to do this online. If not, consider changing banks. Special Caution: Banks and many brokerage firms issue debit cards which allow you to spend money just like a credit card except that the charges are taken from your account immediately versus receiving a monthly bill. A fraudulent charge on your debit card immediately takes money out of your account. Alerting the bank won’t immediately put the money back in your account. In most cases, you’ll have to provide documentation of the fraud and resolution can take days, if not weeks. If finances are tight, this can cause significant financial problems. My recommendation is to either avoid debit cards altogether or monitor your account activity daily.
Periodically, change your logins and passwords. If you are like me, remembering all of your logins and passwords is quite a challenge so changing them periodically is likely to overload your memory. One solution is to consider using a password manager app such as LastPass, 1Password and KeePass. These apps allow you to load all of your logins and passwords into one file that uses encrypted technology for a single password. In other words, you only need to remember one password! Once in, you simply click on the stored site you want to visit and the password manager automatically logs you in.
I’ve been asked if it is worth it to pay a credit monitoring service. You pay a fee of $15 to $40 per month and they monitor and notify you regarding your credit activity. All of the credit bureaus offer this service as do a number of independent companies such as LifeLock. I use one of the bureau’s services and do periodically get notice of activities…so far all legitimate. These services are not the ‘silver bullet’ for identity theft protection but can provide a helpful tool. Your main goal with these services is to alert you quickly if someone attempts to open a credit account in your name.
All of this reduces your identity theft risks but no strategy can absolutely stop someone from stealing your identity. Next week, I’ll give you a step-by-step plan of action if identity theft happens to you.
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