Protecting Your Credit
It has become increasingly important to protect your credit and financial data. With identity theft on the rise, it is essential to be proactive in safeguarding your information. There is high value in your identity. It’s more than just about using your credit. There is monetary value in using someone else’s identity.
There are a variety of ways that criminals can obtain your financial data, so it is important to be aware of the potential risks.
In addition to identity theft, your credit can also be used for other types of fraud, such as account takeovers and credit card fraud.
Every once in a while, I’ll see something on my bank statement from a few months ago that has me thinking “What the heck?” It could have been just about any little thing – maybe some clothes or books off of Amazon Prime.
But then when you look closer at how much money was taken out of your account without permission and put into theirs instead- well let’s not go there!
I think it would help us all if we were more aware of checking our credit scores as often as possible so these things don’t happen.
By taking steps to protect your credit, you can help reduce the risk of becoming a victim of financial crime. There are a number of simple measures you can take to protect your credit, such as monitoring your accounts regularly and keeping your personal information safe.
Checking your credit periodically is not enough to prevent your finances from being accessed without your knowledge. You need to know the baseline of your credit and the finances just like the credit bureaus do.
There are a few simple steps we can take to protect ourselves, such as never sharing our passwords or personal information online or with anyone.
The many ways to protect your credit are just the simple basics. There are some other ways that can be critical to preventing anyone without your authorization from accessing your financial data.
This post is an excerpt from Making Sense of Security. You can view the full advice on protecting your credit in their post here: How to Protect Your Credit
Monitor Your Credit
The most important part of protecting your credit is by monitoring your credit. Your credit is critical when determining if you may be eligible to obtain a loan.
You can do the basic part yourself by checking your credit with the 3 main credit bureaus: Experian, Equifax, and TransUnion.
You could also use one or two of the most popular credit monitoring apps like Credit Karma or Credit Sesame.
Credit is also an important part of protecting your identity. Many types of protection including identity theft, credit card fraud, and bank account fraud including credit unions, can be detected by monitoring your credit report.
Credit monitoring services are available from companies such as IdentityGuard, Aura, Lifelock, Complete ID, or PrivacyGuard.
Credit monitoring services vary with services and pricing. Review at least three credit monitoring services to determine which may be the best for you and your family.
Know Your Score
Knowing your credit score is a critical part of noticing if any identity theft may be occurring. If your score has always been in the same bracket, whether it’s good, extra, or excellent and you see a decrease in your score, then you may be experiencing identity theft.
Once your score takes a hit, it can be hard to recuperate your score back to what it was. It’s very hard to build a high credit score. So you can just imagine that when your score goes really low suddenly, how tough your work is ahead of you.
Many credit monitoring apps update your score weekly. It’s best to use at least two apps that provide your score from different credit bureaus to compare any changes.
Check Your 3 Free Annual Credit Reports.
You can get one free credit report every year. These are from the 3 main credit bureaus: Experian, Equifax, and TransUnion.
There is a way to get one free report from one of the bureaus every four months.
To ensure you spread out the reports to continuously receive your free credit report.
This is done three times a year.
That way you get one free every third of the year and can review each report. Compare each one for discrepancies. Contact credit bureaus for any misinformation.
Use a Credit App
It’s best to use the app for your bank or credit cards. Whether it is American Express, Capital One, or Chase, it’s best to use their app to ensure your financial data is secure.
You can even use myFICO (requires paid service), Credit Karma, or Credit Sesame. These apps are great for checking your credit score.
Credit Karma and Credit Sesame help you get an overview of your credit. They can offer recommendations to grow your score and give snapshots of what you can do to improve your score.
Make sure they are 256-bit encrypted. You can review that under the information where you get the app in the App Store on Apple or the Google Play Store.
Lock Your Credit Cards
Many credit card companies now offer for you to be able to lock each credit card and each user attached to that credit card account. This is an extra measure of protection to ensure that no purchases can be transacted without your knowledge.
If a notification comes through that a purchase that you are unaware of has been declined, then you have a safety measure of protection to call the credit card company and ensure they do not let that purchase go through at all.
Freeze Your Credit
There are benefits to freezing your credit. It prevents identity theft and you are in control of your credit and your identity.
When your credit is frozen, it means that there can be no inquiries into your status. This also means that if you are to apply for employment, mortgage, insurance, or a personal car loan then the credit inquiry cannot go through.
You can freeze your credit yourself by contacting each of the three main credit bureaus individually.
Equifax: Call 800-349-9960 or Equifax.com.
Experian: Call 888‑397‑3742 or Experian.com.
TransUnion: Call 888-909-8872 or TransUnion.com
Do Not Store Your Debit or Credit Card Information
Many shopping carts may save your credit card information automatically. You enter your credit or debit card information once, and then conveniently save it for you. This is to prevent you from having to re-enter the data and to encourage you to shop more often.
A popular one known for this is Amazon. The objective is to provide convenience to your shopping experience so you don’t have to continuously enter your credit card details repeatedly. Instead, the shops will store it for you.
This is actually bad to have your debit or credit card info saved. Especially if the e-commerce business has a data breach, which consumers may not find out about until many months later.
Look for the option to not save financial data. Many sites now have to provide a checkbox to opt-in or opt-out. These options have to be provided. If they are not, do not shop on that website.
Shred Financial Documents and Credit Offers
You hopefully have heard and are aware the best protection of your data is to shred your documents. This includes banks, credit unions, insurance, medical, mail address labels, school records, and of course, credit card offers.
If you don’t have a shredder, you can purchase an inexpensive one for your convenience. You can also rip each item yourself. Keep a separate bag for ripped times. Never throw them out together with your trash.
You are in charge of your security.
Know the Credit Code
There’s a secret code to know when it comes to credit. Many may think that if they get a credit card, then they can just spend and spend until they go to the maximum spending limit. Remember the joke: How can I be overdrawn on my bank account when I still have checks?!?!?
The rule of thumb is that you have no more than one-third of your credit used at any given time on a credit card.
For example, if your credit limit is $1,000, then you should never have a balance higher than ⅓ of that. That is $300.
This method has you utilizing no more than 30-33% of your credit available at any given time. That means you should always have at least 67-70% of your credit available at any time.
Sounds like a good amount of credit is available, right? Exactly! That is the point. Remember, you need to consistently look good on paper and have a strong credit history.
Think of the debt-to-income ratio. You can access Bankrate’s calculator here.
Know Credit Limits before Applying for Mortgages and Loans
To go even further, there’s another secret you need to know if you will need to make a major purchase.
The limit of credit balances to have for 3 consecutive months is no more than 12% of your credit limit.
If you need to buy a car or plan to buy a house, including applying for a mortgage or a vehicle loan, then you need to keep your credit card balances low. This means not utilizing more than 10-12% of your available credit.
Same as above, if your credit limit is $1,000, then you should not use more than $120 for a balance. This helps keep your debt to income-ratio low.
That means you should have 88-90% of your credit limits available prior to applying for major loans. This should be for a minimum of 3 months. The longer you can maintain this ratio, the better.
Get Help with Debt
Accruing debt is very serious. Debt has a way of growing out of control. Ignoring debt does not make it go away. Debt makes one a great risk and extremely difficult to have on your credit report.
It’s best to address any issues with any debts that you may have with the creditor. This includes if you miss a payment or two. This is still a great time to work out the best scenarios for yourself.
After that, your account could be sent to a debt collector. This is where your credit will start to be destroyed for the next seven years. This is the time you want to avoid!
There are many ways to get help with debt. Especially if it’s still in the first few months.
Here’s a resource to help you with any debt you may have listed below.
https://www.consumer.ftc.gov/articles/what-do-if-debt-collector-sues-you
Summary
You can subscribe to a credit protection monitoring service at any time. We actually encourage you to have at least two credit monitoring services. Having more than one helps you have a comparison should one leg be behind the other.
You have worked for the money and it’s important for you to be able to keep your money. Take the time to implement these tips and ensure your own safety.
It’s up to you to keep your information protected.