You have doubtlessly heard horror stories of people suffering from identity theft and subsequent ruined credit, and you are determined not to let this happen to you. What is the best way for you to proceed?
Credit monitoring and identity theft prevention services can be helpful, but they vary in their utility and value. However, there is a simple yet effective tool you can apply pre-emptively – the credit card alert, sometimes known as the fraud alert or security alert. This alert requires that any potential creditor contact you to verify any credit requests made in your name.
This applies to opening new credit accounts as well as raising credit limits or issuing extra cards on an existing account. Best of all – it is completely free, and it does not require that any identity theft or credit card abuse has already taken place.
To apply one of these alerts, contact one of the three credit reporting agencies (Experian, Equifax, or TransUnion) and ask that an alert be applied to your account. Be prepared to verify your identity when placing the call. Placing a report with one agency is sufficient, as each agency is required to notify the other two regarding a fraud alert.
Once you place a credit alert, you can request a free copy of your report from each of the three reporting agencies. Check the report carefully for any charges that you did not place, accounts that you did not open, or other erroneous information.
An initial fraud alert is only good for 90 days, but you can renew it immediately afterward. As long as you remember to renew on time, you can enjoy year-round credit alert protection.
If you have already been a victim of identity theft, you can take advantage of an extended fraud alert that lasts up to seven years. You will need to file a police report to verify the identity theft. Not only is the creditor notification requirement extended, but you may also ask for two more free credit file disclosures during that time (over and above your free annual report), and you are excluded from prescreened credit and insurance offers for five years from the start of the extended fraud alert.
If you are a member of the military on active duty, you can apply a fraud alert for one year without having been a victim of identity theft.
These fraud alerts are quite effective at keeping people from opening new credit accounts in your name, but there is one more extensive step that you can apply – the credit freeze.
Instead of requiring creditors to notify you for verification, this stops creditors from accessing your credit information to begin with. However, this not only stops thieves from opening an account, it also stops you from opening an account until you lift the freeze – and you will have to pay a fee each time you apply and lift the freeze.
For fraudulent use of your existing credit card, your liability under Federal law is limited to $50, but you still have the time-consuming task of straightening out the situation. Some card companies offer services that alert you to unusual activity on your account, such as a sequence of unusually large purchases. Take advantage of any such offers that are available to you.
With credit alerts and any added notifications from your card company, you can feel comfortable that you have put as many roadblocks in the path of criminals as possible – without spending any money. That's a good feeling. Enjoy it.
If you would like to monitor your credit to prevent identity theft and see your credit reports and scores, check out our credit monitoring service.