When it comes to your credit, monitoring for fraud is something you should think about doing. Consider the following scenario. You are blissfully secure with your financial standing because you manage your money wisely and diligently pay all your bills on time. You finally find a great deal on that car you've been wanting and make the dealership an offer. After settling on the bottom line, you begin the loan process. Suddenly, the whole deal falls through because you are turned down for the loan, even though you know that you should easily qualify for it.
After doing a little investigation, you discover that someone has racked up enormous charges in your name. Not only that, but these accounts (that you didn't even open) are now delinquent. You have just discovered that you've become a victim of identity fraud. How did this happen?
There are numerous ways that your identity can be stolen. It could be that a disgruntled friend or family member used their easy access to your personal information to apply for credit. Identity thieves can also get this sensitive information by digging through dumpsters, hacking business computers, or phishing for information through scam emails or phone calls.
Regardless of how they obtain it, identity thieves can use your name and identifying information to obtain credit accounts in your name. In order to keep you from realizing that these accounts even exist, an identity thief will have the bill sent to a different address. Unless you check your credit report, you might not even become aware that something is wrong until you start receiving calls from collection agencies for delinquent accounts.
Basically, credit monitoring means reviewing your credit file on a regular basis for errors and suspicious activity. By checking your credit report often, you can put a stop to the damage before it goes too far. Two ways to monitor your credit are by using a credit monitoring program, or monitoring your credit yourself. The easiest way is with a monitoring program that alerts you within 24 hours of key changes to your credit reports.
You have probably seen advertisements and received solicitations to enroll in credit monitoring. Basically, a credit monitoring program will usually give you access to your credit report, alert you to any changes, and notify you of recent inquiries. The drawback to some of these programs is that many only monitor the information from one credit bureau. This doesn't help you if the information showing the potential fraud is reported by another credit bureau. Also, there is the cost to consider, which can range from below $50 to over $200 per year.
Using an automatic credit monitoring program is something to consider for people who have been victims of identity fraud, or those who are at high risk for identity theft. You might also consider using automatic monitoring if you just don't want to put up with the hassle of checking your own credit reports on a regular basis.
Instead of paying for credit monitoring services, you can do the work yourself. To accomplish this, you will need to order copies of your credit report several times a year. Since there can be significant differences between your reports at the three bureaus, you will need to get copies from all three (Experian, TransUnion, and Equifax). Review all your credit reports carefully for any errors or accounts that you haven't opened.
If you can't afford to order multiple copies of your credit report, there is a way to monitor your credit for free. Under provisions of the FACT Act, you can now obtain a free copy of your credit report once a year from each of the three major credit report bureaus. Begin to monitor your credit by requesting a copy of your credit report from just one of the credit bureaus. Four months later, order a free copy of your report from one of the other two credit bureaus. Wait another four months, and then request your credit report from the last credit bureau. This way, you can get a free copy of your credit report every four months. Each time, review the reports carefully for any unexpected activity or accounts you didn't open.
Credit monitoring for fraud won't prevent identity theft, but it will alert you to a problem before it gets too big. Whether you choose to check your own credit reports or use a paid service, monitoring your credit is important.
For more information on ways to protect your credit, read the following articles: