Identity theft hits a new victim every two seconds. Is your financial future safe from hackers and thieves?
A California man pled guilty to identity theft in 2008 for obtaining the banking information of an insurance company’s policyholders and using it to steal $764,000 from their checking accounts. He got just 27 months in prison – while the victims have struggled against the debts ever since.
Identity theft is not prosecuted to the extent it should and that’s why it is only going to get worse. As it is, identity theft finds a new victim every two seconds in America.As news of theft of 21.5 million social security numbers from the government’s Office of Personnel Management fades from the public view, people are becoming complacent again about what they do with their private information.
Identity thieves could use that to increase their attacks. I laugh at the emails I receive titled, “Your PayPal Account has been Ilimited until Further Notice” but not all identity scams are so easy to spot.
It’s why I’ve started using a credit monitoring service. Better safe than sorry.
But My Credit Score is Free…Why do I need Credit Monitoring?
A few people have asked me why I would pay for credit monitoring when I can get a free copy of my credit report each year. A good credit score is your ticket to better interest rates on mortgages, credit cards and cars. It’s also something that can change overnight.
The Fair Isaac Corporation (FICO) estimates that just one missed payment can send your credit score lower by 50 points or more. If you aren’t watching your credit report but once a year, that’s a lot of time for someone to steal your identity, open a few credit accounts and take as much as they can.
Think about it. A credit score of 700 or higher will get you a prime rate around 3% on a 15-year fixed mortgage. Become the victim of identity theft and those unpaid debts could ruin your credit score, driving it into sub-prime and meaning you could be paying 8% or more on the same loan.
Over 15 years, you would pay nearly $48,000 on the additional interest for every $100,000 borrowed, all at no fault of your own.
Not only will a bad credit score, as a result of identity theft, cost you more money in interest but it could cost you in getting that job you want. If the risk of identity theft happens every two seconds, I don’t want to wait a year to see it on my free credit report.
I recently signed up for TransUnion's credit monitoring service which includes access to their real-time mobile app. The service acts as both a watchdog and a credit repair service in the case of identity theft. The service monitors your credit 24/7 for new issues and possible fraudulent activity.
You get a monthly statement as well as real-time alerts if something changes on your credit report. The program comes with your TransUnion credit score and credit report for just $1 on the free 7-day trial.
Full disclosure: I have never been a victim of identity theft and hope to never be one. I don’t know how well TransUnion works because it’s only been a month and I haven’t seen any potential identity thefts of my credit. Credit monitoring looks like it is just going to be one of those things from now on, like insurance. It sucks to have to pay for it each month but the risk of identity theft is getting too big. I can tell you that knowing someone is monitoring my credit for me is a huge relief and will be worth it if I’m ever a victim.
According to the Department of Justice, there are some things you can do to lessen the chance that you’ll be a victim of identity theft and other things you can do to catch it as soon as possible.
- Shred those ‘pre-approved’ credit card offers before discarding
- Do not respond to unsolicited (spam) emails that offer rewards or payouts
- Regularly check your bank and credit card statements for unknown transactions
- Have your mail held at the post office until you return from traveling
- Monitor your credit report and financial accounts
If you are a victim of identity theft, you can contact the Federal Trade Commission (FTC) at 1-877-IDTHEFT (877-438-4338) or by mail at:
Consumer Response Center, FTC
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Make sure you are careful with all your personal information. If you don’t opt for a credit monitoring service, make sure you are checking your free credit report each year and checking your bank accounts at least every few days. It may seem like a hassle but you’ll be happy you did if you are one of the 43,200 people that fall victim to identity theft every day.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.