Types of Identity Theft Protection

Taking Control of Your Credit Identity

The belief that you are in complete control of your own life can get you into some pretty serious trouble if you aren't careful. Your unique identity, your reputation and especially your credit scores are ruled by your own actions, but only to an extent. To be absolutely certain that your life and your identity are under your own control, you need to take identity theft prevention measures.

Here are a few options that may help you decide which alternative provides the most value and best fits your needs;

Credit Monitoring

Credit monitoring services are heavily advertised, and many people have the impression that these services alone will provide a high level of protection against identity theft. This is a serious and potentially harmful misconception.

Credit monitoring is offered by most banks and all three credit bureaus. Sometimes the service only includes monitoring one bureau's report, which is a problem, since many creditors don't report to all three bureaus. The credit report you are monitoring may not be the one a fraudulent account is reported to.

Another problem with credit monitoring services is that they're designed to inform you of any changes to your credit report; this sounds good, but what many consumers don't realize is that the data in credit reports may not be recorded in "real time." If you purchase something on credit today-do you know when the creditor will report your activity to the credit bureaus? Or when the credit bureaus will update you file? Credit monitoring services are reactive in nature-not proactive. The services are designed to let you know about a problem only after it occurs. If you are considering credit monitoring, find out if it they monitor all three bureaus, if the monitoring is done in real time and whether or not they offer identity and financial recovery services, should an ID theft occur.

5 Myths & Realities of Credit Monitoring Services

Credit monitoring services are heavily advertised by the credit reporting bureaus as the must-have product of the year. It's hard to miss the many jingles and commercials on TV or on the internet. Many people have the impression that these services alone will provide a high level of protection against identity theft. This mistaken belief can lead to serious trouble. Here are some of the common myths and realities about credit monitoring services.

Myth: Credit Monitoring Services will prevent identity theft.

Reality: Most monitoring services simply allow you to occasionally monitor the contents of your credit report. They are reactive, in that they only notify you AFTER a problem has occurred.

Myth: Credit Monitoring Services tell you immediately when someone uses your credit card information.

Reality: Credit monitoring services are designed to inform you of any changes to your credit report. This sounds good, but what you don't realize is that the data contained in your credit reports may not be recorded in "real time." Just because an identity thief opens an account in your name today, doesn't mean the creditor will immediately report that account to the credit bureaus.

Myth: Purchasing one credit monitoring service allows you to monitor each of your credit reports with Experian, Equifax and TransUnion.

Reality: Not always. Many credit monitoring services only monitor one of the big three credit reporting agencies, and not the other two, which is a problem, since many creditors don't report to all three bureaus. The credit report you are monitoring may not be the credit bureau that a fraudulent account is reported to.

Myth: Having a credit monitoring service is much the same as placing fraud alerts.

Reality: No. Credit monitoring services only monitor what is already in your credit report, which you can do for free. You can call the toll free number (877-322-8228) to order your free annual credit reports from each bureau. You can order them all at once-or stagger them and order one every few months.

Myth: Once you learn from your credit monitoring service that there's a problem on your credit report, they will fix it.

Reality: NO! A credit monitoring service does not include credit restoration services. If your identity is stolen, you are on your own to clean it up-unless your monitoring service contract expressly states that it includes a recovery of identity service.

Fraud alerts What is a Fraud Alert?

The purpose of a fraud alert is for creditors to confirm that the person using your name is actually you. With your fraud alerts in place, creditors, lenders, or other prospective users of your consumer report must take steps to verify your identity before they can:

• Issue new credit
• Increase credit lines
• Arrange loans
• Create new accounts for such things as utilities and cellular phones

After a fraud alert has been placed in your credit file, any creditor using that credit file to grant new credit or an extension of credit in your name should take reasonable steps to verify your identity and confirm the credit application is not the result of identity theft. This can be done by contacting you by phone, via the mail or by using other methods to verify the application is legitimate. Most of the time, when someone else is trying to use your identity to get credit, the fraud alert will stop them.

There are two types of Fraud alerts.

There are two types of fraud alerts: an initial alert, and an extended alert.

• An initial alert stays on your credit report for at least 90 days. You may ask that an initial fraud alert be placed on your credit report if you suspect you have been, or are about to be, a victim of identity theft. An initial alert is appropriate if your wallet has been stolen or if you've been taken in by a "phishing" scam. When you place an initial fraud alert on your credit report, you're entitled to one free credit report from each of the three nationwide consumer reporting companies.
• An extended alert stays on your credit report for seven years. You can have an extended alert placed on your credit report if you've been a victim of identity theft and you provide the consumer reporting company with an "identity theft report." When you place an extended alert on your credit report, you're entitled to two free credit reports within twelve months from each of the three nationwide consumer reporting companies. In addition, the consumer reporting companies will remove your name from marketing lists for pre-screened credit offers for five years unless you ask them to put your name back on the list before then.

To place either of these alerts on your credit report, or to have them removed, you will be required to provide appropriate proof of your identity: that may include your SSN, name, address and other personal information requested by the consumer reporting company.

When a business sees the alert on your credit report, they must verify your identity before issuing you credit. As part of this verification process, the business may try to contact you directly. This may cause some delays if you're trying to obtain credit. To compensate for possible delays, you may wish to include a cell phone number, where you can be reached easily, in your alert. Make sure you keep contact information in your alert current.

Credit Freezes

A credit freeze is different from a fraud alert in a number of ways. A freeze generally stops all access to your credit report, while a fraud alert permits creditors to get your report as long as they take steps to verify your identity.

A credit freeze is free to identity theft victims who have a police report proving they have been victims of identity theft. For individuals who are not victims of an identity theft, the cost is $10 per credit bureau, or $30 for all three bureaus to freeze your credit. To place a freeze on your credit file, you must write to each of the three credit bureaus, provide your identifying information and include your payment to each bureau. Freezing will prevent you from opening a new account yourself, applying for a job, renting an apartment, or buying insurance, if your credit report needs to be accessed by a creditor. Once your file is frozen, if you want to open a new credit account, refinance, or get a new loan, you must "thaw" your credit file. That costs money too. Credit freezes can't block thieves from accessing your current credit cards or bank accounts.

Who can access my credit report if I place a credit freeze?

If you place a credit freeze, you will continue to have access to your free annual credit report.  You'll also be able to buy your credit report and credit score even after placing a credit freeze.  Companies that you do business with will still have access to your credit report - for example, your mortgage, credit card, or cell phone company - as would collection agencies that are working for one of those companies.  Companies will also still be able to offer you pre-screened credit.  Those are the credit offers you receive in the mail that you have not applied for.  Additionally, in some states, potential employers, insurance companies, landlords, and other non-creditors can still get access to your credit report with a credit freeze in place. 

Can I temporarily lift my credit freeze if I need to let someone check my credit report?

If you want to apply for a loan or credit card, or otherwise need to give someone access to your credit report and that person is not covered by an exception to the credit freeze law, you would need to temporarily lift the credit freeze.  You would do that by using a PIN that each credit reporting agency would send once you placed the credit freeze.  In most states, you'd have to pay a fee to lift the credit freeze.  Most states currently give the credit reporting agencies three days to lift the credit freeze.  This might keep you from getting "instant" credit, which may be something to weigh when considering a credit freeze. 

What does a credit freeze not do?

While a credit freeze can help keep an identity thief from opening most new accounts in your name, it's not a solution to all types of identity theft.  It will not protect you, for example, from an identity thief who uses your existing credit cards or other accounts.   There are also new accounts, such as telephone, wireless, and bank accounts, which an ID thief could open without a credit check.  In addition, some creditors might open an account without first getting your credit report.  And, if there's identity theft already going on when you place the credit freeze, the freeze itself won't be able to stop it.  While a credit freeze may not protect you in these kinds of cases, it can protect you from the vast majority of identity theft that involves opening a new line of credit. 

Identity Theft Prevention & Restoration Services

Recent headlines about data breaches and losses of personal information have prompted many companies to advertise products or services to help consumers prevent or minimize their risk of identity theft.

The Federal Trade Commission (FTC), the nation's consumer protection agency, says before you pay for an identity theft prevention product or service, make sure you understand exactly what you're paying for. Many people find value and convenience in paying an outside party to help them exercise their rights and protect their information. At the same time, some rights and protections you have under federal or state laws can help you protect your identity and recover from identity theft at no cost. Knowing and understanding your rights can help you determine whether--or which--commercial products or services may be appropriate for you.

Neither a fraud alert nor a credit freeze can stop a criminal from using your name to commit other crimes. Remember, your identity is much more than just your credit report. There's no protection that's one hundred percent fool-proof against identity theft.

There are many companies that offer to take on the task of protecting your identity and recovering it if a criminal steals it. Having been an ID theft victim, I can tell you first hand the peace of mind and value having someone in your corner when you find your information has been compromised provides. However, before hiring one of the many services on the market today, take the time to compare the services offered and determine which services offer the most value to you.

Whether you freeze your credit, flag it with fraud alerts, purchase credit monitoring services or hire someone to take these steps for you, it is still impossible to be certain that you will never become a victim of identity theft. However, before you find yourself in the unfortunate situation of having to spend months or years clearing your name and credit, you need to take safeguards to lessen the odds and impact of an identity theft. The best way to avoid an identity theft is to prepare for one.