Consumer Comeback Blog

What You Need to Know About Identity Theft and Your Credit

Written by Jeffrey Trull

magnifying-glassIdentity theft affects millions of Americans every year. According to one report, 11.6 million adults became victims in 2011, a 13 percent increase from the previous year. While only a portion of these cases include credit-related accounts, these statistics show that criminals are hard at work to steal your valuable information.

Identity theft can cause a lot of headaches. If a thief opens accounts with your information, credit issuers will assume it’s you who’s linked to the account, and you’ll be on the hook until you prove otherwise. Your credit score can be severely damaged, and you may have a lot of work ahead of you to set things right and get the fraudulent accounts removed from your credit report.

But if you’re diligent in protecting yourself, you’ll hopefully never have to worry about any of these issues. Here’s how to prevent and detect identity theft early and stop damage to your credit.

Check Your Credit Report (For Free) Regularly

Examining your credit report is the best way, and sometimes the only way, to detect fraudulent accounts. Just looking over your account to spot details that look unfamiliar can uncover identity theft.

The best part: there’s no need to pay for your credit report. You can get one report from each of the three credit bureaus (Equifax, Experian, and TransUnion) once every 365 days. To maximize your protection, request a report from only one of the three bureaus every four months. Each should contain similar information, so fraud is likely to show up on either all or none of your accounts.

Just make sure to get your credit report from the one site that is actually free – Other sites may have “free” in the name, but they’re typically subscription services that may charge you a fee down the line.

Monitor Your Credit Card Bill

An early warning sign of identity theft is unauthorized charges appearing on your credit card statements. This is why it’s important to scrutinize credit card statements each month even if you pay your bill automatically.

Fraudulent charges can be tough to detect as they’re sometimes small and may contain a description that’s hard to decipher. When in doubt, call your credit card provider to find out more about this charge. If you determine it’s unauthorized, file a fraud claim immediately. This will typically result in an instant credit for the charge while your card issuer investigates your claim.

Leave Sensitive Documents At Home

Carrying a whole slew of information in your wallet or purse is just asking for trouble. If your wallet is stolen or purse lost, lots of important information goes with it. Things you should never carry around unless you absolutely need them include:

  • Passport
  • Social security card
  • Social security number
  • Birth certificate
  • Extra credit and debit cards you’re not using

All of these things will help a criminal make easy work of stealing your identity.

Be Wary of Common Scams

Thieves are always becoming more sophisticated in their methods for stealing your identity. They’ve become less detectable, too, although some of the same scams that have been around for years are still out there.

Some examples to be aware of are:

  • Card skimmers. These devices attach to a card reader and steal your credit card information when it’s swiped. If an ATM or other card reading device looks suspicious, avoid using it.
  • Phishing. This is when a scammer requests any of your info by mail, email, internet or phone. They may pretend to represent your bank or someone else you may give credit information to. Many companies have policies stating they’ll never call or email you to ask for account information, so initiate contact yourself using the business’s information that you’ve verified.
  • Stolen Documents. In this highly-untechnical scam, thieves will sift through garbage looking for personal information on bills or other mail to steal. Shred documents to best protect against this.
For more details on identity theft methods and other information, visit the FTC’s website.

Consider Additional Paid Services

If you’d like a more hands-off approach, consider other services that charge a fee to monitor your credit.

For example, a credit monitoring service by Equifax may help keep a closer eye on your credit by providing alerts any time a new account is opened or a report is pulled. It’s more automatic system and allows you to detect fraud more quickly than manually using free services. This service is often even more valuable if you’ve had fraud issues in the past.

File Fraud Alerts or Freezes

Credit alerts offer some increased protection against fraud. According to Equifax:

An initial 90 day fraud alert indicates to anyone requesting your credit file that you suspect you are a victim of fraud. When you or someone else attempts to open a credit account in your name, increase the credit limit on an existing account, or obtain a new card on an existing account, the lender should takes steps to verify that you have authorized the request.

Fraud alerts won’t protect you in all cases, so be sure to still stay on top of your credit using the other steps listed above.

A credit freeze are even more drastic. If you’re seriously worried about identity theft, you can put a freeze on your credit which will stop new accounts from being opened under any circumstances until you request to have the freeze removed or temporarily suspended. Remember you’ll need up to three days time to remove the freeze before you attempt to open a new account or obtain a new loan of any sort.