We are always told to protect our credit score because it can affect a lot of things about our finances. While you may have done everything that you can to be careful, things can still happen to make you a victim of scammers.
This is probably what more than 70 million Target customers are feeling right now when they found out about the December 15 breach in their database. It endangered all of the personal information in their files from being used by the hackers. This cybercrime is noted to be the biggest in history and you can just imagine the fear of the people who are going through this dilemma.
But what can they do to deal with this situation? How can they keep this from turning bad to worse?
This is where credit monitoring becomes a solution. In fact, this is what Target is offering their customers. Anyone who thinks they might be in danger of identity theft after shopping with the retail giant can go to CreditMonitoring.Target.com to avail of the free service. They cannot do anything about the information that was already taken. However, they can help their client minimize the damage done by the hackers.
Does monitoring your credit report prevent identity theft?
Actually, that is what credit monitoring can help you do – damage control. Identity theft can be very destructive if you do not know how to react to it. You cannot just let it go. The crime after getting your information is just the beginning. If you fail to act immediately, it can get much much worse.
DailyFinance.com reveals some of the scary statistics about identity theft. In an article published last December 31, 2013, the site revealed the following:
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In 2012, victims of identity theft lost more than $24.7 billion.
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16.6 million consumers have been a victim of identity theft.
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45% of reported identity theft incidents were discovered by the financial institutions of the existing accounts. The respective consumers were notified immediately.
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13% of victims found out about identity theft is discovered through mail – after the receipt of an unpaid bill.
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The average loss of a victim of identity theft amounts to $9,650 (misuse of information), $7,135 (new account fraud), and $1,003 (credit card fraud).
The article from Daily Finance also reports that 86% of the victims spend a day or so resolving the issue. Although it is not specified, we assume that these are the cases that are reported immediately. If you failed to detect that something is wrong and that you had been a victim of identity theft, a lot of damage may have already been done. It only takes a few weeks to open several accounts under your name and borrow the maximum allowed amount. You could be in debt within a few weeks time and you did not know about it.
Although credit monitoring cannot prevent your information from being taken from you, it can give you an early detection in case it does happen. This monitoring will only be useful when the deed is done. The unauthorized transactions will tell you that someone is using your name to open new accounts. When you have this information, you can act on it immediately. You can report it to the local authorities, your credit card companies and major credit bureaus. When your credit card information is stolen, a fraud alert will be raised so that anyone using your account will be asked for further identification. Obviously, no one but yourself will pass that test.
While there are credit monitoring services that you can hire to look at your report regularly, you need to know that this is something that you can do on your own. You simply have to get a copy of your credit report. While the three major credit bureaus ask you to pay for it, there are ways for you to get it for free.
The government mandates TransUnion, Equifax and Experian to provide consumers with a free copy of their credit report – one copy from each of them every year. This means you have three free copies. If you want to do a regular monitoring, you can download one copy from the AnnualCreditReport.com every four months or so.
You can also look beyond your credit report for signs of identity theft. View your credit card statements to see if there are purchases done under your name. Any amount that you did not make should be investigated and reported immediately.
Signs from your credit report that reveals you are a victim of identity fraud
When you get a copy of your credit report, you need to look at three things.
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Debt amount. First is your total debt amount. When it is higher than before and you know that it should be less, investigate further. Look at the specifics like in what account is the debt higher than it should be. Feel free to get your credit card statements and other bills to identify the details of the discrepancy.
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New credit accounts. Another area that you need to look into are your credit accounts. If there are new accounts that you did not open, contact that company immediately and let them know that you did not authorize that account. That will prompt the company to conduct an investigation. On your part, you should think about how you will prove that you did not open that account.
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New inquiries. Lastly, you may want to look any new inquiries on your report. This is part of the procedure that lenders and creditors go through. They will take out a copy of your credit report to see if you are responsible with your credit. This is a sign for you that someone is trying to open a new account under your name.
Credit monitoring is not something that will take you the whole day to do. You just have to look into it regularly. You need to protect yourself from identity theft and that includes early detection of the crime.
Other signs that you had been a victim of identity theft are the following.
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You lost your credit card. Even if you think you just dropped it or it was taken with your whole wallet, you need to drop everything and call your credit card company immediately. Your card can be used by anyone and if there is a fraud alert on it, the thief will have a hard time using it. They will be asked to provide additional information that will be required before the transaction will be completed.
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You are receiving collection calls about accounts that you have no knowledge of. This is a sign that the identity theft happened sometime ago. When you receive collection calls, it means the account had been opened, money had been taken and no payment received for at least 30 days. You need to have it investigated immediately. Request for a security freeze on your credit report.
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You monthly credit card statements stopped arriving. If you think that you are not bound to pay for your credit cards when the bills start coming, think again. Sometimes, thieves will change your billing address so you will not catch them using your card. When your bill does not arrive, call your creditor. You might be able to catch the thief before they do more damage to your credit.
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You were not approved of a new account or loan application. When you are a victim of identity theft, the thief will borrow money under your name and they will not pay for it. That will lead to a very bad taint on your credit report. And that is probably why your application for either a new account or loan had been denied.
These are only a few of the signs that is outside credit monitoring but you still need to look out for. Your ignorance of the whole thing is not an excuse that will keep you from the damaging effects of identity theft.