Using Credit Reports to Stop Identity Theft

a hand holding a pen and a form for credit history

From stealing your mail and going through your trash to phony requests for personal information and ATM skimming, thieves have a number of ways to steal your identity.

Stopping them can take a lot of work.  You can put a lock on your mailbox, shred your old bills, use a credit card with an EMV chip, and not respond to any email requests that look suspicious, among other things.

Is identity theft really a feasible problem?  In 2015, identity theft was the second most reported complaint to the Federal Trade Commission, according to the FTC.1  Since then, complaints have increased by 47 percent.  The kicker?  Most of the complaints concerned tax fraud – as if taxes weren’t trouble enough.

Similar to identity theft are imposter scams, which were the third most common complaint in 2014.  Imposter scams are scammers impersonating someone to commit fraud.

The FTC helps consumers report identity theft at IdentityTheft.gov,2 but before you get to the point where you need to report fraudulent activity, take precautions to avoid becoming a victim.

Check Your Free Credit Report

Many people may not know this, but the Fair Credit Reporting Act, or FCRA, requires that each credit reporting company provide a free copy of a consumer’s credit report once every 12 months upon request.3  The companies have set up the website annualcreditreport.com4 as the vehicle through which you can make the request.

There are three nationwide credit reporting agencies — Experian, Equifax, and TransUnion.  Check a different credit report every four months so you’ll have a regular way to check your credit report for possible identity theft.

Keep in mind that some imposter sites claim to offer free credit reports, but may require people to pay after a trial period, according to an FTC warning.

To get your free credit report at a legitimate website, you’ll need to provide your name, address, Social Security Number and date of birth.  You may also be asked for some information that only you would know, such as your monthly mortgage payment, to maintain the security of your file, according to the FTC.

Want to make the process even easier?  If you’re an MSA member, you can view your TransUnion credit score and access your TransUnion credit report right from your member dashboard for FREE.  No trial period.  No hidden fees.  Just your score and your report, available for your convenience.

Reviewing your credit report regularly for accuracy is important because the credit reporting agencies sell the information to creditors, employers, insurers and other businesses to whom you give permission to check your credit.  Why?  One example is that your credit score can be used to set your interest rates on loans and insurance rates, and indicate whether you’re likely to pay your bills on time as a renter.

Okay, back to the fraud problem.  Identity thieves use personal information, such as a Social Security or credit card number, to commit fraud, so you should check your credit report for suspicious activity, like new accounts that were opened in your name but that you didn’t open.

If you find any errors, report them to the credit reporting company and to the information provider — meaning the company that provides information about you.  For example, your credit card company may have incorrectly reported that you were late on a payment when you have a record that you paid the bill on time.

Freeze It

Credit reports can also be frozen or locked by consumers.  This can offer immediate help if you’ve been the victim of identity theft or suspect someone may have your personal financial information.

A credit freeze refuses anyone access to your credit history.  Even financial institutions that you have accounts with can’t access your credit report without your permission.  Without being able to verify your credit, the credit application will be denied, and the thief won’t be able to open a new account in your name.

If you don’t need access to new credit for a long time, such as when you’re away on vacation, then a credit lock can be a safe way to guard your credit.

However, if you’re applying for a job, insurance, or want to sign up for a new utility or phone service, you’ll need to keep your credit reports open for legitimate inquiries.  A credit freeze can be lifted temporarily by contacting the credit bureaus, but you’ll need to pay the $3 to $10 fee that’s also required each time you freeze an account.

If your credit card number or other personal information was stolen a while ago and not used yet by a thief, a credit freeze won’t prevent a pre-approved credit application from going through.

Set a Fraud Alert

Another option is to set a free fraud alert on your credit report.  Known as an initial fraud alert, it requires businesses to verify your identity before it issues credit — according to the FTC.5  That verification will likely be the business contacting you.

The initial alert will be on your credit report for 90 days and can be renewed.  Placing a fraud alert also allows you to order a free copy of your credit report from each of the three major credit reporting agencies.

Credit Monitoring

Checking your credit report every four months is a good first line of defense.  But if you want 24-hour monitoring, you may want to sign up for a credit monitoring service.

Some credit cards offer free monitoring and will alert customers to potential fraud.  For example, you can set a fraud alert when more than $200 is spent at one time on your credit card.  Or, your provider may not allow a large charge and require that you call them to verify such an expense before it goes through.

Credit monitoring services can let you know within 24 hours if a loan application was submitted in your name, which can allow you to quickly call the company and cancel the application if it was something you didn’t initiate.

Many credit monitoring and identity theft protection services cost $120 to $200 per year.  The good news is that if you’re an MSA member, you get FREE credit monitoring and identity theft protection services.

MSA members receive 24/7 monitoring of all credit activity as reported by TransUnion, with new credit inquiries monitored on a daily basis.  Alerts are sent, via email or text, for any detected activity, with the ability to confirm whether that suspicious activity is fraudulent or not.  MSA also monitors a member’s name and Social Security Number, and measures their personal risk of becoming a victim.  Members also have access to a team of Fraud Resolution Specialists™, as well as online tools and resources.

When it comes to preventing identity theft, be proactive: check your account statements each month for charges you didn’t make, keep records of everything in your wallet, and use credit cards that cover all of your liability for unauthorized credit card purchases.  (You can view all of your financial accounts in one place, set alerts, and more, with Wallet — MSA’s online money management tool.)

It’s your credit and your identity that you’re protecting, so make it a priority.

Want more information about how to protect yourself and your finances?  Want help reviewing and understanding your credit report?  Talk to an MSA Money Coach who is a Credit Specialist.  Call 888-724-2326 to get started.

 

 

1 “FTC Releases Annual Summary of Consumer Complaints.”  Federal Trade Commission, 1 Mar. 2016, https://www.ftc.gov/news-events/press-releases/2016/03/ftc-releases-annual-summary-consumer-complaints. Accessed 14 Jun. 2017.

2 “Report Identity Theft and Get a Recovery Plan.”  Federal Trade Commission, n.d., https://identitytheft.gov/.  Accessed 14 Jun. 2017.

3 “Free Credit Reports.” Federal Trade Commission, n.d., https://www.consumer.ftc.gov/articles/0155-free-credit-reports.  Accessed 14 Jun. 2017.

4 AnnualCreditReport.com, n.d., https://www.annualcreditreport.com/index.action.  Accessed 14 Jun. 2017.

5 “Place a Fraud Alert.”  Federal Trade Commission, n.d., https://www.consumer.ftc.gov/articles/0275-place-fraud-alert.  Accessed 14 Jun. 2017.