Almost 120 years old and based in Atlanta, Georgia, Equifax is one of the three largest credit reporting agencies worldwide. They sell credit monitoring and fraud-prevention services directly to the end user, but also offers credit and demographic related data and services to businesses.
In September 2017, Equifax disclosed a cyber-security breach where cybercriminals accessed approximately 145.5 million U.S. Equifax consumers’ personal data, including their full names, social security numbers, birth dates, addresses, and, in some cases, driver license numbers. Hackers did this by maneuvering a weak point in Equifax’s website software.
There had been other hacker attempts on credit reporting agencies in recent years that overshadow the invasion at Equifax in size, but the current Equifax attack is worse in terms of seriousness. Embezzlers were able to drain far more personal information — such as actual passwords to consumers’ medical histories, bank accounts and employee accounts.
The Equifax data breach can scare consumers into jumping in and buying expensive credit monitoring services, without considering their options.
This article serves as a general summary of some of the free credit monitoring services copared to the paid ones. I attempt to demonstrate that the free services may meet your needs just as effectively as the paid services offered by the large credit bureaus.
In the end, it is a matter of closely investigating: what do I need from a credit monitoring agency and what am I protecting against? In light of the recent breach and the countless unscrupulous individuals attempting to steal your identity-most people just need to know early on when their credit files have been accessed, so consumers can put up an early defense. What I mean is if you get a notification that someone has attempted to open a credit account in your name – early detection and proactive efforts on your part can minimize the damage to your credit score and further safeguard your personal information.
A short summary of free credit monitoring options:
If all you’re after is access to your credit score and whether any new accounts have been opened in your name, there’s no need to pay for credit monitoring. There are plenty of services online that can get you this information at no charge.
Free credit reporting websites:
Credit Sesame https://www.creditsesame.com/
Credit Karma https://www.creditkarma.com/
Free credit monitoring would not assist you in the case of identity fraud. You should also not expect any insurance or a dedicated helpline. In my experience as a Consumer Attorney has been that – an ounce of prevention is worth a pound of cure. Don’t be fooled into thinking that you need some sophisticated credit monitoring that promises to spend 1 million dollars if your identity is stolen. The truth is that if you notice some unauthorized activity on your account a simple phone call and follow-up email or letter to the business that credit pulled your credit would stop any further damage to your credit. By law, the credit bureaus must provide the name, address and telephone of any entity pulling your credit.
Generally, the free credit monitoring services will alert when there is a new credit inquiry on your credit report. Because these services are free, and monitor difference different credit bureaus , you could sign up for multiple or all the free services. Once notified of an unauthorized credit inquiry or applications for one should immediately contact source of the credit inquiry and let them know you did authorize the credit inquiry. Of course, you should not stop there. You may want to put a credit freeze and a fraud alert on your account until the issue is resolved or till you are confident there is no further suspicious activity on your credit report.
Paid services like the ones listed below provide a variety of services such as monitoring all 3 credit bureaus, free credit reports, so called dark web monitoring, and identity theft insurance. Depending on what level of assurance you need to be able to sleep at night – these paid services may be an alternative from the free services discussed earlier.
(just add a what credit bureaus these services monitor)
Identity Guard www.identityguard.com
And then there is Annualcreditreport.com …
Keep in mind that while these products above are often marketed as preventative tools, they do not actually guard against identity theft. Rather, what they typically do is to regularly review your file from one or more credit bureaus, and then alert you whenever changes have been made that could signal that you’ve already been a victim.
You can easily do the same by taking advantage of your legal right to access one free report from each of the three largest credit monitoring bureaus, Equifax, Transunion and Experian every 12 months via annualcreditreport.com. If you stagger your requests, you can check a credit report every four months for red flags. Scan it for abnormal activity, such as accounts or credit cards you didn’t open.
You can order the report through each agency, or at annualcreditreport.com. Don’t fall for the add-ons; you just want the score and the report.
Why monitor my credit? (Move this section and the self-serve section up to the scared section above. Where ever it best makes sense.
There are two main reasons you’ll want to use a credit monitoring service:
- • You’re concerned about identity theft and want to protect against it.
- • You need to improve or repair your credit score, but you’re not as concerned about ID theft protection.
Credit monitoring tracks your credit reports and notifies you of any significant changes. Since all things financial flow to your credit report, including loans, credit cards, and payment histories, your credit report is a major factor that financial companies use to extend you any type of loan.
Experts recommend you check your credit report and score before refinancing your current home or buying a new one, as they can be your most valuable tools when determining if you meet the requirements for a new home loan.
If you’re buying a new home and plan to apply for a mortgage, you’ll want to keep your credit score in its best possible shape. The higher your credit score, the more favorable your interest rate will be when securing your home loan. That’s why lenders and realtors advise homebuyers not to open new lines of credit – which trigger hard inquiries and could indicate an overreliance on credit — during the mortgage application process.
Many times, people are unaware of derogatory reports that show up on their credit report until they actually apply for a loan — when it’s already too late. Knowing what’s in your credit report is extremely important for this reason.
The other important way people use credit monitoring services is to prevent identity theft. Any financial account that is opened in your name with your Social Security number will show up on this report. Identity thieves prey on unsuspecting people by taking information about them and using it to use or open new financial accounts in your name. Credit monitoring services notify you any time a new account is opened so you can respond quickly.
Monthly monitoring might also be necessary if your credit files have been erroneously mixed with those of other people by credit bureaus. This could be a recurring problem if you have a common name, or if you have the same name and address as a family member.
But, it is still troublesome to resolve an identity theft or mixed credit file issue, even if you get a timely warning. These problems are not easily resolved and subscribing to a service isn’t necessarily going to guarantee that it will get resolved by the time you need it to be.
Self-serve approaches for protecting credit:
There are ways to keep an eye on your credit for free.
- • Watch your bank and credit card statements for fishy transactions. Some creditors will allow you to set up your own free alerts to notify you when online transactions are made on your account or when a purchase exceeds a specified amount.
- • Many paid credit monitoring services offer 14 or 30-day free trials. You can sign up for one and cancel it after the first month. After that, you can check your credit reports from Equifax, Experian, and TransUnion — for free — by visiting annualcreditreport.com.
- • If you have a credit card, there’s a good chance you can check your FICO score or VantageScore every month just by logging into your online account. Under a program introduced by FICO in 2013, more than 200 million consumers have free access to their credit scores on a regular basis. You should contact your card issuer to see if any such features are available to you, before you pay for them through a third-party service.
- • Consider placing a credit freeze on your files. This instructs the bureaus to prevent new creditors from viewing your credit report and score. Because lenders usually won’t open new lines of credit without viewing your score first, this can prevent fraudsters from opening new accounts in your name.
- • You can also place a fraud alert on your files. A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity. For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request. Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.
(To place a fraud alert on your credit reports, contact one of the nationwide credit reporting companies. A fraud alert is free. The company you call must tell the other credit reporting companies; they, in turn, will place an alert on their versions of your report.)
- • File your taxes early — as soon as you have the tax information you need, before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.
With so many resources available today, you can get a precise picture of where your credit stands at just about any given moment. Paid credit monitoring can be helpful in certain circumstances, but it’s not for everyone. If you believe your personal information could be at risk, or if you want to secure a large loan with no headaches, it may be worth the investment in a paid service. However, don’t let the headlines about a data breach be the sole reason for purchasing credit monitoring. Especially when you consider Equifax, responsible for the data breach, is also the company offering the paid credit monitoring. Potentially, Equifax could benefit from their own data breach if consumers frantically purchase their credit monitoring services.
If you’re merely looking to keep your credit in good health, it’s not too tricky. Limit your credit cards, set up automated payments to pay your bills on time, space out when you apply for loans and accounts, avoid maxing out your credit cards and carrying unpaid balances. And keep it up for years and years. In short, don’t go nuts with credit, and you should be fine.
If you’re paying for credit monitoring or just doing it on your own, be sure to report any errors you spot in your report. Contact the agency that sent you the report—each of them has a process for reporting errors. Incorrect info can be damaging to your credit.