Choose the right tool to protect your identity!

Identity theft is one of the fastest growing crimes in the United States. Its consequences can be a very painful experience. According to experts, victims of identity theft spend an average of 600 hours recovering from this crime! 

Many victims of identity theft do not even realize that their personal or financial information has been stolen. They found out about the crime due to an adverse situation - denied loans or employment, receipts of credit cards they don’t have, notifications from collection agencies or police, etc. 

You can prevent identity theft or minimize its financial consequences by using additional services offered by credit bureaus. Consider credit freeze, fraud alerts or credit monitoring. They are a useful tool in case:

•    You see any suspicious activity on your bills or credit report.
•    Your SSN or personal information has been stolen.
•    Your email has been hacked.
•    Your wallet has been stolen.
•    You have revealed sensitive data online or over the phone

Security freeze

Security freeze (also called a credit freeze) makes it impossible for potential creditors to get access to your credit report unless you unlock it. So if a criminal submits an application in your name, it is likely to be denied because lenders won’t be able to check your credit file. If you are shopping for a credit card, auto loan, apartment or job, you can temporarily lift the credit freeze with a PIN. 

Remember that when you are placing a security freeze, it also keeps you from applying for additional lines of credit. So don’t run to open new accounts if you have placed a security freeze - your application will be denied. Current lenders and government entities are exempt from the freeze.

To request a security freeze, contact each of the three credit bureaus separately. Some years ago credit freezes involved writing a certified letter with your personal information where you requested to place, lift, or remove this service. Nowadays you can also place a security freeze online. 

An average cost of security freeze is $10 for one credit report. If you are a victim of identity theft, you can get a credit freeze for free. In this case you need to provide proof of the theft, for example a copy of report from either the police or law enforcement agency. Some states offer free credit freezes to residents over age 65.

After the credit bureau receives your email and proof of identity, it will send you confirmation that your credit report has been frozen. You will also get a PIN to temporarily unfreeze your credit report or permanently remove the security freeze. 

If you want to ‘unfreeze’ your credit report, you will be charged a fee - usually $10 per credit bureau. In most states, your credit report will be frozen until you decide to unlock it. However, there are some states in which the freeze is over after seven years.

It can take some time to freeze and unfreeze your credit report (up to 3 days), so it makes sense to use this option when you know that you won’t be applying for any new credit, getting a new job or moving in the nearest future.

Keep in mind that credit freeze is not a 100% guarantee against identity theft. If a lender doesn't perform a credit check, a criminal can still get new credit in your name. Luckily, nowadays the majority of lenders check credit files. 

Some types of identity theft, for example skimming, involve your existing credit cards and accounts. In this case credit freeze will not prevent fraudulent actions.

Fraud alerts
 
Fraud alerts protect you from credit applications made without your permission. It works this way: when you (or a criminal) want to apply for a new line of credit, you receive a confirmation phone call at the number you gave before. So fraud alerts don’t prevent potential lenders from performing credit check.

Typically, a fraud alert lasts for 90 days, so you need to renew it quarterly. Another option is to sign up for an identity protection service, such as TrustedID, Debix or LifeLock. They will renew fraud alerts for you until you cancel their service.
 
If you are a victim of an identity theft, you can ask for an extended fraud alert (valid 7 years). In this case you will need to submit a copy of an identity theft report that you have filed with a law enforcement agency. 

Placing a fraud alert is considerably easier than placing a security freeze. You need to contact one credit bureau and request them to place a fraud alert on your credit report. It is a free service. After processing your request, the credit bureau will notify the other two. They, in turn, will also place fraud alerts on your credit report.

A fraud alert is a good method to prevent criminals who are using your information without your consent from getting instant credit which is often offered at stores. However, keep in mind that some creditors can deny your applications for instant credit if you have a fraud alert. And unlike the credit freeze, the fraud alert can’t be lifted temporary. If you want to remove it, you must do it in writing. 

Credit Monitoring 

If you don’t have time to regularly monitor your credit report and control that it doesn't contain any errors, fraudulent charges or new accounts that you didn't initiate, you can take advantage of credit monitoring service. It provides customers with unlimited access to their credit report (and sometimes credit score) and alerts about critical changes (new accounts, credit inquiries, address changes, public records, etc.)

Credit monitoring services are offered by credit bureaus and third-party companies. This service costs from $4.95 to about $14.99 per month depending on the provider. Some companies offer 30 day free trial. 

Credit monitoring is typically available either as one-bureau service (you can get access to your credit report from one credit bureau), or three-bureau service (access to your credit report from all 3 credit bureaus). The second variant is more advantageous because the information in credit reports can vary.

The frequency of alerts telling about a change in your credit report can also vary. Typically, each credit bureau offers several credit monitoring plans. The cheaper plans offer weekly notification, the more expensive ones offer daily notification. 

Credit monitoring service can be a very effective identity protection tool because you will be informed about all critical changes. However, it is not as pro-active as fraud alerts or security freeze. You will be notified after the crime.

Keep in mind that some lenders report to the bureaus only once a month. It means that you may find out about new account only in 30 days. 

What service is your best match? It depends on your personal needs and requirements. If you just want to make sure that lenders will verify your identity before opening new credit accounts in your mane, then place a fraud alert and regularly renew it. If you’re afraid of unwanted activity on your credit report and don’t plan to open new accounts, consider security freeze. If you want to make sure that your credit report is accurate, then your choice is credit monitoring.