3 Ways to Protect Yourself From Identity Theft

By: Stacey Nickens

When my children were younger, they had a tendency to ride their bikes and scooters while wearing flip flops. No matter how many times I reminded them to wear closed-toed shoes, they would come home with bruised and battered toes after ignoring my directions to wear proper protective footwear. While identity theft is never the victim’s fault, I still encourage my clients to invest in some “protective footwear.” In the financial world, such protective gear could look like freezing your credit or investing in credit monitoring programs. Doing so could help you feel more confident in your financial security while also thwart bad actors attempting to open lines of credit in your name. Let’s review three ways you can protect yourself from becoming the victim of fraud.

Add a Fraud Alert
You can add a fraud alert to your credit to ensure that creditors must confirm your identity prior to processing credit applications under your name. An initial alert remains in effect for one year, and an extended alert remains in effect for seven years. With an alert in place, you can continue to use your credit as you normally would, while also knowing that you would be notified if someone were attempting to open credit in your name. To add a fraud alert to your credit, you simply need to do so at one of the three credit bureaus (Experian, TransUnion, or Equifax). Adding a fraud alert at one bureau automatically places an alert on your credit at the other two bureaus.

Sign Up for Credit Monitoring
The three major bureaus and other private agencies offer credit monitoring services. Depending on the provider, credit monitoring services could include being notified if your credit score has changed, being notified if spending on one of your credit accounts has significantly increased or decreased, being notified about new lines of credit opened in your name, and being notified about suspicious activities. Signing up for credit monitoring could help you quickly detect suspicious activity and handle the issue before it gets out of hand. Experian and other services offer free credit monitoring. You can also pay for credit monitoring that offers more functionality.

Keep in mind, credit monitoring does not detect suspicious individual transaction activity on any of your accounts. Accordingly, it may be in your best interest to set up free alerts on your bank and credit cards in order to be flagged if suspicious spending occurs. You simply need to contact your bank or credit card company to set up these alerts.

Freeze Your Credit
A credit freeze prevents many institutions from pulling your credit report, until you lift or “thaw” the freeze. If a thief were to try to apply for new credit in your name, they would likely be unsuccessful because the credit agency would not be able to pull your credit report. Freezing your credit does not impact your credit score, but it would prevent credit checks that you authorized. For example, if you forgot to lift your freeze, a creditor may not issue you a new line of credit because they would not be able to pull your report.

However, implementing and lifting a freeze is a fairly simple process. Each of the three bureaus allow you to do so online or via mail. To freeze your credit online, you would visit Experian, Equifax, and TransUnion’s websites, setting up an account and a freeze at each bureau. You would then keep track of your accounts’ passwords in a secure location. The bureaus may also give you a Personal Identification Number (PIN) that you will need to use to unfreeze your credit. Remember to keep track of this PIN in a secure location. If you need to unfreeze your credit, you simply need to log back into your account at each bureau, provide a PIN if necessary, and unfreeze your credit. You can choose to indefinitely unfreeze your credit, unfreeze your credit for a window of time, or unfreeze your credit for specific parties.

While your credit is frozen, certain parties can still access your report.

  • You can view your own credit report.
  • Lenders and card issuers with whom you have preexisting accounts can check your credit as part of their account management processes.
  • Landlords and rental agencies can pull your credit to screen you.
  • Phone carriers and utility companies can pull your credit to determine a security deposit on equipment.
  • Debt collection agencies can pull your credit if they are trying to obtain payment.
  • Child support agencies can pull your credit to determine child support amounts.
  • Credit card issuers can pull your credit if they have already prescreened you for credit offers.
  • Auto insurance companies can pull your credit during their rate-underwriting process.
  • Potential employers can pull your credit if you have authorized them to do so.
  • Government agencies can pull your credit when executing court orders or warrants.

We are here to help
As always, the Elm3 team is available to assist in any way we can. We are happy to help you set up systems to protect your credit. Simply contact us, and we will help you start taking protective steps today.