Credit reports can be instrumental in your efforts to detect the first signs of identity theft. Early detection of this crime can be essential in reducing the damage identity theft leaves on your finances and your emotional and psychological well-being. However, you must use your credit reports and monitoring services strategically to understand the early warning signs of identity theft so you can act swiftly to reduce the damage it does to your financial health and credit score. Here’s what you need to know about credit reports and monitoring to maximize their benefits for your identity theft avoidance and recovery efforts.
Credit Reports and Identity Theft
Credit reports serve as snapshots of your current credit situation. They include a record of current accounts in your name and associated with your Social Security number. It also details account balances, credit utilization ratios, the timeliness of your payments, and the total balances owed on your combined accounts. In other words, it provides a big picture of your debt and credit situation that you can use to determine how healthy your current circumstances are.
Regular Monitoring as a Preventative Measure
Regular monitoring is the key to effectively preventing identity theft. At the first sign, you will know when someone makes new credit inquiries with your name and Social Security number. It allows you to proactively contact lending institutions to stop any credit disbursements for those accounts and to limit damage to your credit, financial health, and personal reputation due to identity theft. Early detection means you can act swiftly to reduce your exposure to financial and personal harm when you become the victim of identity theft.
Obtaining and Monitoring Your Credit Reports
Monitoring your credit reports is essential in safeguarding against fraud and identity theft. Every individual is entitled to request a free credit report annually from each of the three primary credit reporting agencies: Equifax, Experian, and TransUnion. That allows you to review your credit history for discrepancies, unauthorized accounts, or unfamiliar transactions that might signal fraudulent activity. To obtain these free reports, you can visit the official website, AnnualCreditReport.com, or request them through the mail. Regularly checking these reports will provide an early warning system, enabling you to take prompt action if you spot anything amiss.
Spotting Signs of Identity Theft
Identity theft happens to people from all financial backgrounds and walks of life. Don’t think you have to have a perfect credit score or the proper address to become a victim of this crime. There are signs you can watch for that indicate you might be a current victim of identity theft, including the following:
- Bills that do not arrive or do not arrive on time (this is easy to discover if you subscribe to the USPS Informed Delivery service that lets you know what mail you should receive daily).
- Notification for credit cards or loans you did not apply for.
- Notifications about credit inquiries you did not initiate.
- Collection calls about accounts you do not own.
- Charges you did not make on your credit card statements.
- Overdrafts you didn’t make on your bank accounts.
- Incorrect information on your credit report – unfamiliar accounts, incorrect addresses, etc.
If you notice these signs, you want to check your credit report and may consider further investigation.
Responding to Identity Theft
If you believe you’re the victim of identity theft, first contact the three credit bureaus and place a fraud alert on your account. It alerts lenders and credit card companies that fraud is suspected and to avoid opening new accounts until the completion of an investigation into the claim. Next, report the theft to all accounts that are open fraudulently to stop those accounts and freeze them until the case gets investigated. Fill out an Identity Theft Affidavit and file a report with your local law enforcement agency (police or sheriff) so you can provide a copy to creditors who require it. Finally, report the theft to the Consumer Financial Protection Bureau and the FTC.
Recovering from Identity Theft
Recovering is the hard part. It may take quite a while for the investigations to conclude and for you to get the final tally on what the identity theft will ultimately cost you in terms of money.
Long-Term Protection Strategies
Some people purchase insurance policies to protect against identity theft. However, you can limit your exposure with early detection and swift action. The critical thing you can do is be proactive in your efforts to protect your personal information, monitor your credit reports, and be diligent regarding security. It means practicing good email security, shredding identifying documents, and securing documents in your home so that not everyone can access sensitive information.
Takeaways
It isn’t always easy to see identity theft coming your way. Without credit monitoring and regular access to credit reports, you could become a victim without knowing – until you’re in debt more profound than you can afford to escape. Using credit reports and monitoring is an essential first step for detecting and addressing identity theft if you become a victim.