3 Ways To Protect Your Finances From Identity Theft

Protect Your Finances

Identity theft can happen in the blink of an eye and it may seem like there’s little you can do to stop it. However, there are measures you can take to protect your finances and to reduce the potential damage from identity theft. Here are three simple ways to protect your finances against identity theft.

Check Your Credit Reports

You are eligible for at least three free credit reports per year – one each from Equifax, Experian, and TransUnion. You can check all three at once or you can check one at a time three times throughout the year. In certain circumstances, you may be eligible for an additional free credit report, such as being declined for credit based on information in your credit report. (Note that for Covid-19 relief, you can temporarily access free credit reports every week until April 20, 2022). The official website to obtain your free credit reports is annualcreditreport.com.

Be sure you don’t confuse your credit report with your credit score. They are different. A credit report is a summary of your credit history and it lists information like the credit accounts you have and how long you’ve had them, terms and interest rates, initial balances and amounts still owed, payment history (detailed by the month), past due amounts if any, and many other details. Lenders review your credit report before extending credit. Your credit report may also be used in decisions relating to potential employment, insurance policies, new utility accounts, and applying to rent a residence.

Since your credit reports are used for so many decisions, it’s important to check them periodically for accuracy. It’s up to you to ensure that the information is accurate and at some point, you’re likely to find a mistake that needs to be corrected. Checking credit reports is also an effective way to catch identity theft. It’s not uncommon to discover a credit account on your report that you didn’t open yourself. Most often, reporting mistakes (or fraud) on your credit report is a straight-forward process and can be done online or over the phone.

Freeze Your Credit

Another way to protect your finances is to freeze your credit. You can freeze your credit through each of the three credit agencies (Equifax, Experian, and TransUnion) and it’s free. When your credit is frozen, your credit report is not accessible to lenders or others who want to view your information. This provides great protection against identity theft because if a lender can’t see your credit history, it’s highly unlikely they’ll extend new credit (which means it will be more difficult for someone to open an account under your name).

Note that when you apply for new credit, you’ll need to temporarily unfreeze your credit so that lenders can view your information. While this is a slight inconvenience, it is easy to do online and is well worth it! Unfreezing your credit is also referred to as lifting a credit freeze. When you make this request online, you can specify how long you want the temporary lift to last and after the specified time period, your credit freeze will automatically go back into effect.

Set Up Alerts

An easy way to monitor activity on your accounts is to set up alerts. It’s best to do this for both your bank accounts and credit card accounts. Alerts can be set up online and you can choose to receive them via email, text, and sometimes a phone call. Consider setting up the following alerts:

• For bank accounts and credit cards: Opt for an alert if a transaction is over a specified dollar amount
• For bank accounts and credit cards: Opt for an alert to receive daily or weekly balances (whichever you prefer)
• For bank accounts: Opt for an alert if your balance drops below a specified threshold
• For credit cards: Opt for an alert if your balance increases past a specified threshold
• For credit cards: Opt for an alert if your available credit passes a specified threshold

Alerts make it easy to stay tuned in to your accounts without needing to log in every day. And if fraudulent spending occurs, you will likely discover it through the alerts you’ve set up and you can stop it quickly. This is especially important with accounts you don’t use often because you may not be checking them as frequently.

These steps won’t eliminate identity theft but they will help you to manage your financial information and to quickly take action against fraud when it occurs. The faster you respond, the less likely it is that you’ll experience long-term and irreversible damage. If you have any questions about protecting your finances, feel free to reach out.



Hannah Szarszewski, CFP®, AFC®

Founder & Financial Planner

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