Identity theft is a serious crime, with increasingly greater numbers of consumers being affected every year. As part of a protection strategy, the Federal Trade Commission (FTC) and other consumer credit organizations recommend a proactive approach to safeguarding your identity: checking your credit report annually.
A credit report records information about your bills and loan and repayment history, available credit, and outstanding debts, and is typically used by lenders when deciding to accept a loan or credit application. In addition, credit reports can alert you to accounts that have been fraudulently opened in your name, unauthorized charges made to your existing accounts, and other crimes committed by someone using your personal information.
According to the Fair Credit Reporting Act, you can request a free copy of your credit reports from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year. For your convenience, you can access all three agencies through a single website, www.annualcreditreport.com.
The FTC suggests that you order all three reports, even if you choose to stagger your report requests throughout the calendar year, as the information may differ from each bureau. This is because credit reporting is voluntary, and therefore creditors may subscribe and report information to just one agency, or all three.
Reviewing Your Reports
Usually, a credit report is divided into four major sections: identifying information, credit history, public records, and inquiries. The identifying information on your report will include your name, current (and previous) address, Social Security number, driver’s license number, telephone number, birth date, current and previous employers, and your spouse’s name, if applicable.
The credit history section details your payment history with banks, retail stores, finance companies, mortgage companies, and others who have given you credit. Each account, sometimes called a trade line, will appear with the following information: name of creditor, account number, type of credit (i.e., installment loan or revolving credit), account participation (e.g., joint owner, individual account, or authorized user), date opened, last activity (date of last payment or charge), high credit (the credit limit or original loan amount), terms (number of installments or amount of monthly payments), balance at the time of reporting, past due balance at the time of reporting, status of the account (open, closed, inactive, etc.), and date of last report. It is in this section that accounts opened or affected by identity thieves may become apparent.
The public records section includes documents that reflect your history of meeting financial obligations, such as bankruptcies, collection accounts, judgments, and tax liens. Since public records can have a serious, negative effect on your credit, verify that the information belongs to you, not someone who used your personal information.
Finally, the inquiry section lists all the businesses that have received your credit report during the last 24 months. Inquiries are categorized as hard or soft. Hard inquiries are those you initiate by filing a credit or loan application. Soft inquiries often come from marketers who want to sell you something. If you do not recognize a listed business, be sure to find out the nature of the business and why they are looking at your credit report.
A Mistake or Identity Theft?
If you find a mistake on your credit report, immediately contact the credit bureau that issued the report using the form provided or by following that particular agency’s instructions. If the error is serious, and you suspect that your identity has been stolen, contact the FTC’s Identity Theft Hotline at 1-877-IDTHEFT (877-438-4338). Be sure to keep detailed documentation of all communications with creditors, agencies, and the FTC.
You can help safeguard your identity by continually monitoring your credit reports. For more information about identity theft, visit the FTC’s website at www.ftc.gov.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.