Do you want to be one of over eight million identity theft victims? No, but most of the services sold by “identity theft protection” companies you can get for free. Here’s how.
Identity theft protection companies love touting advertising statistics like “8.4 million adults were victims of identity theft in 2007” and “the mean fraud amount per fraud victim was $5,720 in 2007” (PrivacyRights.org) because they’re really scary. There’s almost no reason to pay a monthly fee for something you can do yourself, most of the time at no cost. Here’s what ID Theft Protection usually involves. Note: Several of these not only make it hard for other people to get new credit under your name, but also for you, so be sure to pick the ones that work best for your financial situation.
CHECK YOUR CREDIT HISTORY
The first step in prevention is to check whether you’ve unknowingly become a victim. By keeping close tabs on your report, you can identify signs of fraud as early as possible. Look for any lines of credit opened up in your name that you don’t remember. If you spot them, dispute the credit item with the credit bureau and let them know it’s identity theft. You’ll need to do this with all three bureaus. You can get your free credit report from annualcreditreport.com. Because you only get one free one from each bureau per year, I like to check one report from a different bureau every four months. When you pay for identity theft protection, this checking is one of the “benefits” they tout… something you can do yourself, absolutely free.
FREEZE YOUR CREDIT
You can freeze your credit report, stopping most identity thieves immediately. With your credit history frozen, no one can access your credit history. If a responsible lender can’t access your history, then they won’t give the thief any credit. They could have all the information in the world but your credit is locked away. It’s a pain to initiate, costs about $10 at each bureau (and you’ll have to do each one separately), but is a very effective strategy if you’ve been having identity problems.
Each state deals with credit freezes differently. In some states there are fees, in others credit freezes are only available to consumers who have filed an ID theft related police report. Other states do not allow credit freezes at all. To find out what the laws are in your state, check out Consumer’s Union for an up-to-date round up of credit freeze laws.
STOP THE UNSOLICITED CREDIT CARD MAILINGS
Save a few trees and your identity by signing up at OptOutPrescreen.com, that will stop most of those unsolicited pre-approved applications. Then call up all of your cards and ask to be removed from their marketing lists, which should stop all the rest. OptOutPrescreen.com stops mailings from companies you don’t have an existing business relationship with, calling each card will stop mailings from companies you do have an existing business relationship with. By reducing those pre-approved offers, you reduce the risk some someone opens up your mailbox and steals one of them for their own nefarious purposes.
PUT FRAUD ALERTS ON YOUR CREDIT HISTORY
Call up each bureau and request that they put a fraud alert on your account. This lets any potential lender or creditor know that they should do some extra investigating when it comes to their request because fraud has occurred in the past. Lenders don’t want to be party to identity theft anymore than you do so they will take the notice seriously. It’s not a hard protection like freezing your credit, but it’s better than nothing if you don’t want to deal with the hassles of freezing and unfreezing your credit.
BUY A CROSS-SHREDDER
A cross-shredder is a paper shredder that cuts vertically and horizontally, turning sensitive mail into confetti. If you think a torn up credit card application wouldn’t be accepted by any respectable credit card company, you’d be wrong. Red Tape Chronicles has a story about how Chase approved a torn up credit card application! You can pick up a cross-shredder at any office supply store and they’re well worth the investment.
If you read identity theft protection company websites, you’d think they had some secret way of putting a force field around your credit – they don’t. As for large dollar guarantees to protect your identity, many only cover failures on their part. If a thief gets through by some other means or doesn’t fit their narrow interpretation of “theft,” guess who else you have to fight? Yep, the ID theft company itself. With those steps, you can do for free what some identity theft companies will charge you a ridiculous $20 a month for. Save your money for all those “hot deals” at Circuit City.
Jim writes about personal finance at Blueprint for Financial Prosperity.