Well, it’s official – there are only two months to go before the end of the year. And while you’ll no doubt be focused on Thanksgiving, vacation and the holidays in the upcoming months, don’t forget to do some end of the year credit housekeeping.
The reason I’m writing this piece two months before the end of the year is in hopes that you won’t wait until the last week of December to do these three things:
Claim Free Credit Reports
We’ve had the right to free annual credit reports since 2003 when the Fair Credit Reporting Act was amended by “FACTA” or the Fair and Accurate Credit Transaction Act of 2003.
I know I bring that up every few months, but only 4% of those free credit reports are claimed each year, which isn’t very good. You can claim your report once every 12 months at www.annualcreditreport.com. They don’t “roll over” like some cell phone minutes, so don’t waste them and forgo your rights.
2011 marked the 11th consecutive year “identity theft” has been the number one consumer complaint to the Federal Trade Commission. I don’t believe anything has happened in 2012 that would break that streak.
If you’ve never been a victim of identity theft, you don’t know just how invasive the crime can be, especially considering how your personal information has been compromised.
There is no way to avoid being a target. The fact that you have an identity will always make you a target. There are, however, ways to reduce your exposure at little to no cost.
Opt Out of Preapproved Credit Offers
Identity theft is much more fun to discuss as a high tech crime — data breaches, phishing, spear phishing, etc..… But, you’d be surprised to learn that a large percentage of ID theft victims had their information stolen by either family or friends or through low-tech methods, like skimming or stolen mail.
You can almost completely eliminate high value (to the thief) mail by opting out. Opting out is free and can be done at www.optoutprescreen.com.
When you opt out, you’ve disallowed the credit reporting agencies to sell your name and address to credit card issuers who want to send you conditional offers of credit. And when those stop coming, so goes away one more way an ID thief can get your personal info on a credit card application.
Finally, if you really want to start getting those credit card offers in the mail again, you can always opt back in.
Freeze Your Credit Reports
If you believe your identity is at risk or you just like the comfort of knowing that you have some added protection, I’d suggest looking into freezing your credit reports.
Freezing your reports (aka: a “security freeze”) takes your credit files out of circulation except for companies with whom you have an existing relationship and collection agencies trying to track you down for payment of defaulted debt.
That means if someone applies for credit in your name, the creditor will not be able to get your credit report or credit score, which means no new credit will be issued in your name. According to Scott Mitic, CEO of TrustedID, “A credit freeze is the Fort Knox of credit report protection.”
Freezing your credit reports is an alternative to monitoring your credit reports for changes that are indicative of fraud. Credit monitoring is a perfectly fine way to combat ID theft but it is reactive, where a credit freeze is more proactive.
The cost to freeze your credit reports, which is different state by state, is also much less than it is to monitor your credit reports with a subscription service. For example, in my home state of Georgia, it would cost me a one-time fee of $3 to freeze my credit report at any one credit-reporting agency. If I’ve been the victim of fraud, then that fee is waived.
Unlike credit monitoring, credit freezing must be done at each credit bureau if you want to accomplish a tri-bureau credit freeze. If you want to freeze all three of your credit reports, then you’ll have to do so with each of the three credit reporting agencies independently.
One last thing to keep in mind as it pertains to credit freezing is the inconvenience factor. When your credit files are frozen, you won’t be able to access them unless you “thaw” them via the credit bureaus’ websites, and there’s a small fee to do so.
You’ll need to keep this in mind if you’re even applying for credit or simply trying to claim your credit reports, as I strongly suggested at the top of this article.
Don’t wait until 2013 to do these things…
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.