Eleven Months Left for New Year's Resolution!

During January, I’ve covered the topics of identity theft, security freeze, credit reports and credit scores.  You may have set your own New Year’s resolutions, but I’ll bet you have figured out that I think taking care of your personal identity and credit record should be one of them.  I encourage you to set aside some time this week, even just 30 minutes to assess your personal situation.  The following week, set aside 30 more minutes to address any issues that were revealed in your assessment.  By setting an appointment with yourself, you are much more likely to get the business handled.  Also, according to some time management classes I’ve taken lately, setting a timer can eliminate the drudgery of a task.  The suggestion from the class was to set a timer for 25 minutes and then take a 5 minute break.  For me, it always seems like I spend more time dreading a task than actually doing it.  The same may be true for you. 

While you are assessing your credit and data security information, you may want to take an identity theft risk assessment test . The risk assessment is broken into sections: checking for evidence of identity theft, destroying sensitive personal information, and limiting access to sensitive personal information.  There are great questions that point you to important behaviors, like checking your credit card statements against your receipts, so that you are able to tell if there are unauthorized charges.  When I looked at the risk assessment web

site, it reminded me that I had a charge on my credit card that I wanted to investigate.  It is surprising how many good practices you can learn from a simple quiz. 

The section on limiting access to sensitive personal information is especially important.  Be sure not to give out your personal information on an unsolicited phone call or allow someone to access your computer remotely.  There are plenty of frauds out there.  If it seems suspicious, it probably is.  If a caller presses you for information, hang up.  If it is a legitimate call, they will follow up using other methods.  You may also want to opt out of prescreened credit offers, phone calls and junk mail.  You can do so by going to the opt-out portion of the Federal Trade Commission’s website.

Another place to be cautious is at the check-out stand.  Do not leave your credit card sitting out where others could see the numbers.  With today’s pervasive technology, someone near you in line could take a photo of your card without your knowing.  I try to keep my card covered while in the cashier’s line right up until the card is swiped. 

If improving your personal information security is one of your goals this year, I encourage you to set aside 30 minutes this week toward that endeavor. 

Opt Out of Unsolicited Mail, Calls, Email

Become High Scorer!

Last year, I was converting old VHS tapes to DVD.  One of the tapes was of my husband playing high school basketball.  It was a game where he was a scoring machine.  I didn’t know him in high school, so it was fun to watch.  While I was concentrating on the game, he walked in and said, “I made 30 points that night, and that was before the three-point line.”  Many people (who are old enough to know) would agree that the three-point line changed the game.  With sports, knowing how many points you earn and under what conditions is important.  The same is true with your credit score.

Credit scores are usually expressed in numbers ranging from 300-850.  These scores are what lenders use to determine how big of a risk you are.  But it is no longer just lenders who use the scores.  Some insurance companies, phone companies and employers also use the scores to determine their risk in doing business with you.   Do you know your credit score?  Do you know how it is tallied?  Did you know the credit game had a score board?

Much of your credit score is determined on your past behaviors and experiences.  Your score is based on information in your credit report.  In the starting lineup are your current balances and limits (or a ratio of the two), how many accounts you have, and your payment behavior (whether you pay your bills on time or not).  There are a variety of factors that may be considered and many versions of a credit-scoring models.  The scoring systems are supposed to help predict who is most likely to repay a debt.  You can get a credit report free at annualcreditreport.com, but getting your credit score involve additional fees. Some credit card companies are now including a credit score with their billing. 

You should know your credit score and which direction it is trending over time.  Many people get confused between a credit report and a credit score.  If you were playing basketball, for instance, the credit report would be how you played the game – assists, steals, rebounds, hustle and so forth.  Your score, or how many points you had, should reflect how well you played versus your opponents.  Credit scores give a numeric assignment to how well you are doing on the financial court compared to others.

Your 3-digit credit score can drop if you make a credit payment up to thirty days late.  A substantial drop in a credit score could affect interest rates offered to you from mortgages to credit cards. A different interest rate on a mortgage can add up to thousands of dollars over the course of the loan.  Late payments are just one of the many factors.  Your score can be affected by current transactions on a credit card.  A lender recently explained why my husband’s credit score was higher than mine.  At the point in time when my credit was reviewed, I had higher balances on my credit cards.  The company scoring me could only see the current charges, but not the fact that all balances were paid in full each month.  Of course, my husband was pleased with outscoring me. 

If you are trying to improve your credit score, you might look at some game-change strategies.  Pay your bills on time.  Timeliness and consistency account from more than 30 percent of your score.  Be careful how many times you apply for credit, especially the plastic kind.  Multiple inquiries to your credit report, such as those made by credit card companies or other lenders, can lower your score.  However, you definitely should check your own credit report, because there is no penalty on the score for self-inquiry.  If there are errors, you need to cry foul and get them fixed. 

If you have credit cards, you might think twice before applying for more, or before cancelling any of them.  Applying for new credit cards lowers the average length of time you have had credit established.  If I have three credit cards that I’ve had for five years and I get a fourth one that I’ve only had for a few months, that lowers my average.  If I cancel a credit card that had a $5,000 limit, I’ve just changed my potential “debt to limit” ratio.  It really is a numbers game.  Having a variety of credit can be important to show you can balance multiple credit lines at the same time.  For instance, an auto loan, home loan and credit card that are all paid promptly each month can prove your ability to manage your finances. 

No matter how you play the game, it is important for you to know your score.  It is a little like a team watching a game tape or reviewing stats.  It’s about improving how you play the game, and eventually that gets reflected on the score board. 

For more game strategies:

Credit Reports

Higher Credit Scores -- FTC

Is Someone Else Using Your Credit?

For the longest time, I have had a prompt in my calendar yearly to check my credit report.  Credit reports can be received free annually from the three major credit reporting companies – TransUnion, Equifax and Experian.  In the past, I would request my credit reports from all three companies at the same time on the website www.annualcreditreport.com .  There are numerous other sites that purport to offer free credit reports, but generally there is a catch – and a fee.  If you want to check your credit, be sure to use the right site.  Federal law allows you to get a free copy of your credit report once every twelve months from each of the three credit reporting companies. At a recent financial class I attended, the speaker suggested that rather than get all your reports at once, you should stagger them, so that every 4 months you would be checking the accuracy of your report from at least one of the companies.  Given the frequencies of data breaches, it makes pretty good sense.  Maybe you would like to put a prompt in your calendar every four months to check out your credit, rotating through the three companies. 

Once you have your credit report in hand (or on screen) you can check to make sure that there are no errors, or loans/credit cards in your name that you didn’t open yourself.  Two of my family members, I’ll call them Steve and Susan, have had their identities stolen in very different ways, but checking credit reports routinely might have tipped them off a little sooner to the problems.  In the one case, a “friend” had too much access to Steve’s financial information and was able to open new credit cards in his name, directing the mail to another post office box.  Luckily, Steve was informed about it by a mutual acquaintance who suspected what was happening.  When he requested his credit report, Steve was surprised to see how many credit cards were open in his name and their balances.  Yikes! 

Not only do credit reports show what lines of credit are open in your name and your balances, they also show payment history, credit limits and closed accounts.  Credit reports can be useful tool for those wishing to improve their credit, as they can see where they can make improvements. I have known people who have obtained their credit reports, changed their financial habits and improved their credit record after a couple years of diligence.  Improving credit after your identity has been stolen may take more time and involve a lot more hassle.

My family member, Susan, had her identity stolen by a co-worker, who unfortunately not only damaged credit in her name, but also has quite a rap sheet with law enforcement under Susan’s name.  Not only has the identity theft hurt her credit, but it has also cost her a few jobs.  She is in a profession that requires background checks and typically, employers are not inclined to hire someone wanted for drug running and prostitution; nor do they want to invest the time to wade through the identity theft situation to get to the real truth.  Imagine explaining those charges at an interview! 

Unless you check your credit regularly, you could also become victim to a thief who steals your name and your credit.  Whether you check yearly, or every four months, I encourage you put it on your calendar to guard your identity by checking your credit report.  

Resources for you:

Tips for Taxpayers, Victims about Identity Theft and Tax Returns
How to Place a Fraud Alert
Identity Theft

Winter Task -- Freeze! I mean, Security Freeze!

I have lost track.  Maybe you have, too.  It might have been three or four or five times last year.  It seemed that notice after notice came saying that my personal data security had been breached.  From major retailers to a state department to my employer and probably a few entities I really did lose track of, I received notices that my security had been compromised.  In a few cases, “suspicious” activity had been under investigation for months before I was notified, giving someone with bad intentions plenty of time to steal my identity and establish credit in my name before I was notified of the breach. With our digital environment, someone halfway around the globe can be quietly hacking computers for personal data.  My name, birth date, social security number and numerous other details are stored in who knows how many databases on who knows how many computers and networks.  I remember a day and age when a person only worried about their credit cards getting used by someone else if their wallet got stolen.  In today’s world, a person has to be increasingly diligent to guard their financial security. 

Fortunately for me, a long time before all these breaches with my data, I lost my wallet.  I was on my way to 4-H camp and had several youth traveling with me.  In the chaos of getting the last-minute camp supplies and loading everyone back into the vehicle, I believe I misplaced my wallet.  From a payphone (remember them) at 4-H camp, I coordinated with my husband, accessing files at home to cancel credit cards and go through necessary procedures to protect us from unwanted access to our finances. When I got back from camp, I placed a security freeze on my credit.  I had originally read about the Montana Security Freeze options through an MSU Extension publication.  The process was relatively simple. 

The current information about a security freeze from the Experian website states that consumers in the state of Montana have a right to place a “security freeze” on their credit reports.   This freeze prohibits major credit reporting companies from releasing any information on their credit reports without their express authorization, except those with whom the consumer already has a relationship.  According to the MontanaDepartment of Justice website, “It costs $3 to place a security freeze on your credit files with a credit bureau, for a total of $9 to freeze your files with all three credit bureaus. For a security freeze to be effective for married couples, both spouses have to freeze their separate credit files. The total cost for a couple is $18.”  Basically, a security freeze makes it difficult for someone else to apply for a credit card in your name or to steal your identity for financial gain.  A security freeze is designed to prevent credit, loans and services in your name without your consent. 

In the past decade, the security freeze has seemed to work for me.  I check my credit reports regularly and there have been no “surprises” there.  I have also applied for two loans since placing a security freeze and each time, I had to expressly unlock my security freeze, again for a nominal fee of $3, to allow the local bank to access my records.

If you have lost track, too, of how many times you have received letters saying your data security was breached, I encourage you to put a security freeze on your accounts.  

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Resources from the web, curated for you -- 
Or, I've done the searching, so you don't have to ...

Montana Department of Justice: Identity Theft

Protect Your Identity

Annual Credit Report -- Free