Another Reason You Really Need to Remember to Check Your Credit

We’ve all seen the headlines about major data breaches — like the one at the Office of Personnel Management that exposed the data of more than 21 million consumers — and heard the horror stories of what happens to victims of financial fraud. However unsettling it may be, every data breach acts as a good reminder to all of us to do what we can to protect our personal information and to remain watchful in case our information does get in the wrong hands. In the case of the OPM breach, Social Security numbers were among the exposed data – which is a key and very sensitive piece of a consumer’s identity. Identity thieves can commit numerous crimes using SSNs, including medical identity theft and opening new financial accounts in your name. Not all crimes using your SSN can be immediately (or maybe ever) detected, however there are still ways to more easily detect some types of fraud – namely the financial kind. And if you discover fraud, you can get to work on resolving it — that’s the important thing to remember.

One of the best ways to detect financial fraud is to consistently monitor your credit reports. It may be overwhelming at first to read through your credit reports, but once you get the hang of it, it becomes a little easier. Here’s a guide to understanding your credit report.

You can get a free annual credit report on AnnualCreditReport.com from the three major credit reporting agencies – Experian, TransUnion and Equifax. (If you want to check your credit more often, you can get a free credit report summary every month on Credit.com.) Once you have a copy of your reports, you need to go through them thoroughly and look for any incorrect information, such as names and addresses that are not yours. Also make sure that you recognize all of the credit accounts and that the balances and payment histories are basically correct.

If you see any suspicious or incorrect information, call the financial institution to report the issue immediately and get it corrected. Also notify the credit reporting agency (or agencies, if the issue is showing up on all three reports) to make any necessary corrections.

Often I hear people tell me they don’t have time, or forget, to do these checks once or twice a year. Fair enough, but consider that if you do become a victim of financial fraud and you don’t resolve the issue relatively quickly, it can cost you lots more time and money down the road to undo the damage. So if you truly feel you don’t have time to do these credit wellness checks, you may want to consider signing up for a credit monitoring service. Most of these services will notify you if anyone is trying to open a new credit account, which can be a good way to catch a thief in the act.

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I also encourage my clients to pay close attention to bank statements and credit card statements, too. Unfortunately, we cannot stop all identity theft from happening and we really have no way of controlling what others do with our information once they have it — even if those authorized to have it promise to keep it safe. What we can do is be proactive by making a habit of checking our credit reports, reviewing all the statements we receive, and limiting the sharing of our personal data as much as possible.