Online shopping, smartphone banking and social media make your daily life easier, but they also increase your risk for identity theft. Each time you use public Wi-Fi in a coffee shop, library, or cafe to check your bank account online, you run the risk of someone intercepting your data as it's in transit. If you click on a "phishing" email (one from a supposed official source trying to obtain sensitive information), you release personal information that con artists can use to rob you. Scammers may even comb through your social media looking for clues to shake down other people for money (such as calling your grandparents and pretending to be you asking for money in an emergency). The Federal Trade Commission reports that identity theft cost Americans about $16 billion annually.
How to protect yourself
Under federal law, you're entitled to a free credit report once a year from any consumer credit-reporting agency (CRA) that keeps records on consumers nationwide. The largest -- also known as the "Big Three" -- are Equifax, Experian and TransUnion. Ask for the report at AnnualCreditReport.com, the only website authorized to offer free credit reports from the three largest credit reporting agencies.
To keep closer track of your score and see how it changes over time, you may want to sign up with a credit monitoring service. Although credit monitoring cannot get rid of the risk of identity theft entirely, it can trigger an alarm on any suspicious activity so you can nip it in the bud.
But credit monitoring isn't just about preventing identity theft. It also helps you follow your credit score and may motivate you to improve it --just finding out you have a low score may be the boost you need to raise your credit score. Monitoring can also help you spot any mistakes that unfairly harm your credit score.
Some services offer free monitoring, although the features they offer are minimal. Examples include Bankrate, Compare Cards and Credit.com.
Credit-monitoring services that charge a small fee offer more features, including more-frequent monitoring, automated alerts of suspicious activity and special programs for responding to fraud. Most charge between $15 and $30 monthly and attract first-time customers with free trial periods. Examples of fee-based providers include Experian, Equifax, TrustedID and Identity Guard.
How to choose a credit monitoring service
The best monitoring services providers give you unlimited access to credit scores and credit reports from all the major credit reporting agencies. (However, if the monitoring is done by a major credit bureau, you may have to pay to see credit scores from the other bureaus). They may also offer tips for improving your credit score. The credit scores and reports should be updated daily or at least monthly. Not all providers keep track of all CRAs, so look for a service that does. Also check how often the provider does credit monitoring. The ideal frequency is 24/7.
Despite these steps, some scammers may still manage to steal your identity. Some outfits offer added features to help you recover. If someone steals your wallet or it gets lost, a monitoring service with lost wallet protection will help you cancel and reorder your credit cards, debit cards and health insurance cards. A victim assistance program can offer professional help to stanch the damage. Or, if you and your smartphone are inseparable, subscribing to a service that texts warning alerts can be convenient.
Choosing the best service depends on your circumstances. And the quality and features of services can vary widely, so do your homework before selecting your monitoring service.
For example, look into a credit-monitoring company's history before making your final decision. Have other consumers filed complaints about the company with the Better Business Bureau or the state? The provider's website should clearly explain its background, indicating that it's a legitimate business operation.
Also, be wary of companies that over-promise, such as assuring you that you'll be 100 percent protected against ID theft if you sign up with them.
If you think you are at risk high of identity theft, you can request fraud alerts directly from one of the major CRAs -- Equifax, Experian or Transunion. They'll contact you if they spot a suspicious transaction or credit application.
Should you freeze your credit report?
You can slam shut access to your credit with a credit report security freeze. This ensures that the major credit bureaus do not give out your credit report to anyone, including creditors or lenders, without your permission. (Don't join this program if you're just about to buy or refinance a house, since it will slow things down). This program, available for an extra fee, helps protect you against identity theft since you'll be notified if anyone tries to open a credit or loan under your name. To set up a credit freeze, you have to contact each credit bureau separately. This whole process can be fairly onerous, especially if you may want to apply for credit sometime soon. Unless you are recovering from identity theft and think the scammer may strike again, you may want to skip this step.
There's no way to completely protect yourself from identity theft, but credit monitoring can at least give you peace of mind. Ignoring your credit puts you at risk, but the right monitoring can put you in control.
What to Look for in Your Credit Reports. Consumer Financial Protection Bureau. https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/what-to-look-for-in-credit-reports/
Disputing Errors on Credit Reports. Federal Trade Commission. https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports
You Think You May Have Been the Victim of Fraud or Identity Theft. Consumer Financial Protection Bureau. https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/victim-fraud-identity-theft/