Prevent Identity Theft With Credit Report Monitoring Services and Options

by Silicon Valley Blogger on 2009-03-2220

Why Monitor Your Credit? My Id Theft Story

I know someone who would have benefited greatly from some form of credit monitoring. He’s someone in my family who doesn’t follow his finances too well — someone like him would benefit from putting things on autopilot. Especially since one day, when applying for credit, he suddenly discovered no less than FIVE new accounts opened under his name but with different addresses. Five foreign names, nonetheless. It turned out to be just the tip of the iceberg for him. If he had some way of being alerted to these issues sooner, it would have saved him a great deal of pain and inconvenience.

Using A Credit Monitoring Service To Protect Your Credit History

If you’re looking into credit monitoring services, know that they’re intended to let you know whether your identity has been compromised: you are alerted quickly of any identity fraud that may have taken place against your accounts so that you can take action before more damage can be done. They’ll alert you to problems that they pick up from reviewing your credit report. They are known to be effective with catching the fraudulent creation of new accounts. Some well known services:

  • LifeLock: For $10 a month, they’ll contact credit bureaus and ask them to put a fraud alert for you every 90 days. They’ll opt you out of pre-approved credit card offers, order your free annual credit reports, assist you if you ever lose your wallet, notify you of suspicious activity on your report.
  • TrustedID: for anywhere from $8.25 to $15.83 monthly, you can have individual or family credit reports monitored, including the use of your medical and social security benefits. You also have the ability to initiate a credit lockdown so your credit reports cannot be released to others.
  • Equifax has its ID Patrol, which locks down your credit file with them, monitors three credit bureaus as well as internet activity, and gives you identity theft insurance for $9.95 to $14.95 per month. You can also check out other Equifax products here.
  • myFICO: The company behind the FICO score system has a few different products to help you keep tabs on your credit score. You could go with quarterly monitoring for $4.95 a month or pick from the other packages (such as their FICO Score Watch).

There are many more such monitoring and credit repair services available but they aren’t as recognizable as the names I listed above. Plus, they’re pricier (some of them are charging $30 a month)!

Tips For Using Credit Report Monitoring Services

There are people who would rather pay for someone else to package their credit information in an easy to digest fashion. It can be pretty convenient when such services offer you access to your credit score and report as well as to automated alerts on credit changes (to all 3 credit reports from major credit bureaus). Other benefits include getting to see your FICO credit score (this is not easy to get for free) and receiving some amount of identity theft insurance. The downside? The main disadvantage is that you’d have to pay up. For some, it’s worth it; while others prefer to try something else.

Despite their cost, people are signing up to credit monitoring services. As you shop for a credit monitoring service, make sure to see what good they do, and what limitations they have so you can make the right choices. Be careful not to get a false sense of security when using such a service, by knowing what they do and do not cover. For instance, some of the services I’ve canvassed specifically point out that they only check the information you have with certain credit bureaus.

Is “something better than nothing”? In my opinion, these services may be best for people who’d like someone else policing their reports, even on a partial basis. Again, it’s a form of insurance to reduce the risk of identity theft, where you buy some peace of mind. To some, that peace of mind is worth whatever it is they pay.

Prevent Identity Theft: Free or Cheap Ways To Monitor Your Credit

What’s important to note is that there are also free or cheap ways to monitor your credit, but it will take effort and diligence on your part to track your credit ratings this way. These are great for “do it yourselfers”. Simple suggestions for heightened vigilance include: evaluating your bank accounts on a regular basis, ordering free annual credit reports from the bureaus, using fraud alerts or security freezes. For all these cases, there are pros and cons. Let’s go over these ideas to monitor your credit in more detail:

1. Free Option: You can track your own credit reports and scores. You can do it yourself, but you’d want to do this on a regular basis. Pick up your free credit reports at AnnualCreditReport.com or from the 3 major bureaus once a year. Be aware though, that while AnnualCreditReport.com will allow you to check your credit report for free, they don’t provide you with your credit score, so you’ll have to get a hold of this information some other way.

2. Free Option: Certain services offer free proprietary credit scores. If you need to know your credit score, then it’s important to understand what it is you’re getting. There are credit scoring variations that exist that have been the source of confusion for consumers (including myself). You can get free credit scores from companies like CreditKarma.com and Quizzle.com, but these are non-FICO proprietary scores that may vary from the standard FICO scores most people use. If you’re open to sharing your social security number and can accept a non-FICO score, then these sites are a good place to visit. Check out our post on how to get free credit scores for additional information.

3. Free Option: Set up fraud alerts on your credit information. You can contact your credit bureau and request alerts on your credit report every 90 days (it may be renewable) so that you’ll get creditors to call you first for verification before they extend credit or open a new account. But I read that there are some caveats to this and may not be available as a long term solution.

4. Free Option: Check with your financial institution if they’ll offer you free monitoring or if you’re eligible for it. Some of them have this available to customers who sign up for certain specific financial services or products.

5. Semi-Free Option: Try credit monitoring services with free trials.
Then there are services that shout to the world that they’ve got free credit reports and scores for the taking. The truth is, companies like Go Free Credit, FreeCreditReports360.com and FreeCreditReport.com only offer free trials, where you get a taste of their service or product for a limited period of time, typically 7 days. If you sign up, be aware that you’ll be automatically enrolled in a service that will charge you a monthly fee unless you cancel by the end of the trial period. I know a few people who go this route and just cancel the service after the trial is over.

6. Free Option: Check out your Identity Score. Another option is to check on your ID score to evaluate your risk of identity theft. The site My ID Score offers a free service to help you determine if you’re vulnerable to id theft or fraud. Knowing your score may allow you to take proactive steps towards increasing your identity protection. If you’re at risk for identity theft (as per your ID score), then double your efforts to monitor your credit! As you can see, there are many ways to go about keeping an eye on your credit; it just depends on what you’re looking for.

7. Cheap Option: You can opt for a security freeze, which “freezes” or locks your credit information at all three reporting agencies unless you unlock it with a password or PIN. It’s best for people who don’t need to apply for credit and who don’t need others checking on their credit often. The bureaus will seal your credit information until you tell them otherwise. It’s a bit of a hassle but you won’t have to pay much to do this. But note that it may not be a good idea to try if you need to access your credit reports often, or if you are opening accounts on a regular basis. This can become a major inconvenience in certain cases, as having to use a password or PIN can be a pain. But hey, lifetime protection with a security freeze is only $30, so it’s one cheap way to get some security!

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 20 comments… read them below or add one }

Kristy @ Master Your Card March 23, 2009 at 12:16 am

Great post! In the banking industry, we’re seeing an influx of identity theft, especially with all of the consumer breaches that have been happening. People aren’t taking this seriously enough until it’s too late. Great tips here!

I personally like the FICO score watch. It’d been an invaluable tool for me, particularly when I was working my way out of debt. Not only was I constantly monitoring the changes in my score, but I was also able to keep an eye on my records. If anything looked suspicious, I was able to get it resolved immediately. I especially liked that myFico sent email alerts on various things to help me keep track.

fbi March 23, 2009 at 3:33 am

Nowadays, credit cards represents a major importance in the life of an individual. This is to permit people to purchase the things they wants and likes anywhere and anytime. It may help for emergency causes like medical bills and other transactions. some adults could develop more moral codes and stronger ethics for facing their credits and have the initiative to pay for the bills. They would also consider the gratification for the delayed finances that they should also be concerned. It has a big benefits for an individual to utilize their self-confidence if they have to be at the stage for credits or for having a money-keep.

DES March 23, 2009 at 7:26 am

Somebody opened a credit card account in my husbands name and hit the bank for $15,000. They fixed it for him and put a freeze on his accounts at no charge. It was clearly their mistake because they didn’t even follow their own rules. It shocked us how easy it was to do.

Craig March 23, 2009 at 12:26 pm

Everyone says lifelock is the best, or at least the few people I spoke to about it and things I’ve read up on. Do you recommend one over the other? For a younger person in early 20’s and single, would you recommend? Sure it sounds great, but another $100 for something adds up.

camille March 23, 2009 at 2:20 pm

Good article. After my mail was found as part of an FBI recovery, I became aware of the reality of identity theft.

DebyGuy March 25, 2009 at 9:16 pm

I can’t say that I have had my identity stolen, although I have had my credit card and bank card skimmed on more than one occasion. I think it is important that we monitor credit so we can catch it before it is to late.
I found something scary today as I stumbled upon a forum. Contained within this forum were the credit cards and names of many users. I am assuming that there were hacked from a merchant site that does not use tight enough encryption.
Secure your finances!!!!!

Annie July 20, 2009 at 5:11 pm

Many consumers are in the habit of using passwords such as date of birth, mother’s maiden name, pet names, and children names for the ability to gain access to email and other other secure websites. Identity thieves recognize this and are able to figure out these types of passwords easily.

Ann July 23, 2009 at 7:13 pm

It is not always possible to stop our identity being stolen. That is why I always take care of my personal data and always have a high index of suspicion.

Luc September 2, 2009 at 10:53 am

Interesting post. However, I’d even go for more prevention. These services are probably really good, but they come into action when someone is already trying to fool around with your accounts.
What people should realize is that they should not let any personal information accessible to others. You could start with destroying all your CDs and DVDs before throwing them in the garbage bin, like described in this post.

Then destroy hard disks before disposing of a PC. And I’ve seen new USB memories on the market that require a PIN code before accessing the data. Everybody should use those for personal data!

John DeFlumeri Jr October 1, 2009 at 7:40 pm

Isn’t it just something else to buy with another monthly automatic charge to the Visa?

Silicon Valley Blogger October 2, 2009 at 7:40 pm

@John,
Thanks for the observation! One of the five or six things I talked about in the article has a charge, but majority of the stuff I cover here, you can get for free.

Ann-Marie at Quizzle October 7, 2009 at 5:41 pm

Hi SVB – Thanks for mentioning Quizzle as a place to get a free credit score! I just wanted to mention that we do NOT ask for a Social Security Number. In fact, we’re the only place on the web where you can get a free credit report and score, no SSN, no credit card number required. So keep that private 9-digit number to yourself and enjoy your freebies. Happy Quizzling!

Silicon Valley Blogger October 7, 2009 at 7:42 pm

@Ann-Marie,
Thanks for the response! I apologize for the wording I used in the article — you are right, I realize that Quizzle does not require a social security number. I may have referred to that requirement in the general sense so I appreciate the clarification you’ve made here. I’ve used Quizzle before, and it’s been very useful!

Scott Lovingood October 8, 2009 at 7:39 pm

I love CreditKarma. It is a great easy way to keep an eye on your credit. I use a technique to keep an eye on my credit score using only the free Annual Credit report. I simply request one reporting agency every 4 months. They have a great deal of overlap and it allows me to freely check my credit without spending a lot of time on it.

The Credit Freeze is an excellent way to completely lock down your credit. I believe it expires every 6 months so you want to make sure and add it to your calendar to reset every 6 months.

Keeping an eye on your credit is part of protecting your identity. You should also shred documents with SSN, personal IDs, etc on them.

Credit reports are one part of an overall financial plan. Make sure you have one and you are ahead of 90% of the world.

Bargain Babe October 8, 2009 at 7:43 pm

Thanks for this post, SVB. Credit scoring is definitely a confusing area. I’m glad you mentioned CreditKarma – I was going to if you didn’t! I wrote about them recently and was a little ticked off because they never explained their “free credit score” was not the FICO score, but a proprietary score, as you explain. Still, it is not a bad place to start monitoring your credit.

I love the idea of the ID score and am going to check it out for a possible blog post on BargainBabe.com!

I also wanted to share an idea for a future blog post on the topic. Don’t a lot of credit cards offer credit monitoring protection for free? Thanks!

Silicon Valley Blogger October 9, 2009 at 7:44 pm

@Bargain Babe,
I’d certainly like to explore the idea of free credit monitoring via credit cards. From my experience (with my credit cards), they offer a free trial, then as usual, hook you for a monthly or regular charge. But it’s definitely something to investigate! That’s a good topic to look into — thanks for the tip! :)

FB @ FabulouslyBroke.com October 18, 2009 at 7:45 pm

We don’t have any of those services available to us in Canada, but I do pull my credit report once a year just to check.

The score doesn’t matter much to me, because I know I am in the mid 700s (and improving as I am now debt free).

Jason Hommel December 20, 2009 at 7:45 pm

Be careful about using your credit card for “free trials”. Read the fine print and you’ll see that you’ll have to cancel before the free trial period ends or they’ll bill you automatically for it. Not to mention bill you for other things as well like subscriptions. Then you’ll have to go through a long process of disputing the charge.

Alejandra February 23, 2010 at 3:28 am

Interesting post. However, I’d even go for more prevention. These services are probably really good, but they come into action when someone is already trying to fool around with your accounts.

Al Smart April 25, 2010 at 6:59 am

Thank you for posting this! I enjoy the peace of mind of having a credit monitoring service working for me!

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