Your Identity Has Been Stolen: What to Do First

What to Do First After Identity Fraud

It can be an overwhelming feeling when you find out your identity has been stolen. You fear the worst, but don’t know where to start. There may be a lot of work to be done to clean it up, but the first things you should do are take steps to stop new fraud from occurring. 

Here are five things you should do immediately after you discover you have been a victim of identity theft:

1.     Put a Fraud Alert on your credit reports. According to FTC Guide Taking Charge: What to Do if Your Identit­­y is Stolen, the very first thing you need to do is get a fraud alert placed on your credit report. This lasts for 90 days and will require banks or companies to contact you personally before opening new accounts or credit. You must call one of the three credit bureaus to report the crime, and that bureau is responsible for alerting the other agencies.
2.     Report the theft to the Federal Trade Commission. You can report the crime to the FTC through an online form. During the reporting process, the FTC will help you create a customized recovery plan. You will also be given an ID theft affidavit.  
3.     File a report with your local police. According to USA.gov, you may need a police report, as well as the FTC report, to report the fraud to any financial institutions where you have an account. Bring your FTC ID theft affidavit with you to file the report. Although the police may not solve the case, it is still important to create a record of the crime to potentially help local authorities become aware of any larger problems in the area.
4.     Request your credit report and review for errors. You are entitled to a free credit report after an identity theft. Request your credit report from all three credit bureaus and carefully review the reports for any new accounts or lines of credit that you did not open. US News & World Report recommends checking any accounts that are dormant or that you are not currently using for new charges.
5.     Contact the banks and companies where the thief opened accounts. If you find fraudulent activity, immediately contact the company and request the account(s) be locked or closed.

Time is important when it comes to identity theft. Prioritize these five steps to help prevent any additional fraudulent accounts being opened. By quickly taking action to contain the damage, you can then begin the process of removing any blemishes from the crime from your credit history.

Yes or No: The Store Credit Card Debate

Yes or No: The Store Credit Card Debate
You go to check out at a big box store or department store, and the clerk tells you that you can save 10 percent (or sometimes more) off today’s purchase if you apply for a store credit card. As you are doing the math in your head, she rattles off a list of other benefits that will likely save you money. But you wonder if getting a store credit card is a solid financial move or if it could negatively impact your credit score.

Here are 5 questions to help you determine if getting a store credit card is the right move:

Are you building or rebuilding your credit history?

Store cards can be easier for someone with a low credit score or a short credit history to obtain. This often makes store cards a solid choice for people establishing credit or repairing a low credit score. However, if your goal is to improve your credit score, you must pay your bills on time and keep the balance low.

How many other recent inquiries and new accounts have you recently opened?

For example, if you have recently bought a car, opened a different store card, and had a credit inquiry while applying for an apartment lease, you may want to consider passing on a new card at this time. Hard credit inquires, which include applications for new credit or loans, accepted credit card offers, and credit limit requests, can lower your credit score. 

Are you planning on paying off the card monthly or possibly running a balance?

Hopefully, the answer is pay it off every month. But if there is a chance you will be carrying a balance, you need to carefully think about the impact on your debt to available credit ratio. If your credit utilization ratio is over 30 percent, your credit score could be in danger and creditors may turn down your application.

What is the APR?

It’s easy to think that the interest rate is low because of an introductory offer of a low rate, but be sure to read the fine print to find out the actual APR. The 2016 Creditcard.com Retail Credit Card Survey found that close to half of store credit cards carry an APR of 25 percent or higher. Even if you plan on paying it off each month, it’s important to know the rate since unexpected expenses may come up or your financial situation may change.
  
Will you save money with the card benefits?

If cardholders get free shipping on all online purchase and you order clothes from the store’s website several times a month, then getting the card will likely save you considerable money. Or if you are making a single large purchase, such as a washing machine, and the card offers a high discount such as 30 percent on a cardholder’s first purchase, then the cost savings may be worth opening a new card. According to the 2016 Creditcard.com Retail Credit Card Survey, 26 percent of store credit cards reward you for spending more, and 50 percent offer signup rewards and purchase discounts. Since store credit cards often come with a host of benefits, you’ll need to weigh the pros and cons carefully before deciding to take the leap.

By carefully considering the impact to your credit as well as the financial benefits of opening the account, you can feel confident that you are making the right decision each time you add a new credit card to your wallet

Identity Theft Prevention: What to Keep and What to Shred


Your shredder is one of your best defenses against identity theft. Identity thieves often look for documents containing personal information in trash cans, since many people unknowingly throw away information that can be used to open credit card accounts in their name or enable other forms of identity theft.

But at the same time, it’s a horrible feeling to realize you actually needed to save a document just as it is being cut into tiny pieces. Shredding a document too soon can also have significant financial ramifications, so you want to ensure that you retain tax records and related financial documents for a minimum of seven years in the event of an audit, as recommended by Consumer Reports.

Things to Save

Major Life Event Documents – According to the Federal Trade Commission (FTC), certain documents that are related to major life milestones should be saved forever. These include birth certificates, adoption papers, social security cards, citizenship papers, passports, marriage certificates, divorce papers and death certificates. Since the FTC recommends keeping these items forever, if these items are misplaced or shredded, you may want to get replacements since it is likely that you will need to present this information in official form in the future.

Tax Returns – The IRS recommends keeping tax returns for a period of time ranging from three years to indefinitely, depending on the situation. However, the FTC recommends taking a conservative approach and saving them forever. Since the ramifications of not having a tax return when you need it can be high, it makes sense to err on the side of caution with tax documents.

Things to Shred

Credit Card Offers – These are a gold mine for thieves, since they contain personal information such as your name and address.

Bank Statements – Although many banks cloak the account number, this document still gives identity thieves enough information to get started. Most experts suggest shredding bank statements after one year, but you could save yourself the trouble and  sign up for electronic statements instead.

Credit Card Statements – In addition to personal information and credit information, statements also contain a large amount of data about your whereabouts and habits. As with bank statements, the Center for Identity Management and Information Protection (CIMIP) suggests going paperless and opting for electronic statements to help safeguard your information.

Receipts – If a receipt has your credit card information or bank account number visible, it is especially important to shred this information.

Safeguarding your personal information is a key to preventing identity theft. By taking the time to destroy documents which can be damaging in the wrong hands, you can decrease your odds of becoming a victim of identity theft.

Closing Credit Card Accounts: Positive or Negative for Your Credit Score?

Is increasing your credit score on your list of goals? If so, you may immediately think cutting up your cards and closing your accounts is the first step on the road to a higher score. But before you pick up the phone, it’s important to understand the ramifications of closing accounts on your credit score.

Many people think that when they cut up a card the account is closed. However, you have to actually contact the credit card company to close out the account. If you are concerned about continuing to use the card, then cutting up the card to prevent usage while paying off the balance can be an effective strategy.

The reason closing accounts can impact your credit score is that a large portion of your credit score is calculated based on your debt-to-available credit, or credit utilization percentage. Most experts say 30 percent is a good debt-to-credit threshold, and the lower the better.

For example, you have the following credit cards: 

  • Card with $5,000 limit and $2,500 balance
  • Card with $7,000 limit and no balance

You have a 20.8 percent credit utilization, which is within the target range.  However, if you close the account with the $7,000 limit, then your credit utilization score changes to 50 percent, which above what experts recommend. Instead of having the intended effect of increasing your score, you may very likely cause your credit score to be lowered.

The Smart Way to Close Credit Cards

When considering closing accounts, use the following tips to potentially lessen the impact on your credit score:

  • Calculate your credit utilization percentages and carefully think through the impact of closing specific cards on your debt-to-available credit ratio. Determine which card makes the most sense to close based on the impact on your credit utilization score.
  • Consider paying off the credit cards you are going to keep open before cancelling any cards. This may lessen the impact on your credit utilization score.
  • After each card is paid off, check your credit report to ensure that the zero balance has been reported to the credit bureaus, which will also reduce the impact.
  • If you decide to close an account, contact the credit card company and follow procedures for closing the account. Different banks have different procedures ranging from completing a form to simply making a verbal request over the phone.

Increasing your credit score can take time and effort. By making sure you are not inadvertently making financial moves that cause a step back in the process, you can continue on the road to a healthy financial future. 

The Real Cost of Identity Theft


The Real Cost of Identity Theft
It is no secret that having your identity stolen is something you should actively protect yourself against. Resolving an identity theft is time consuming, may cause you to have credit requests denied, and leaves people feeling personally invaded. However, many people do not realize that their finances could take a significant hit after one’s identity is stolen, often in surprising ways. Every situation is different and much of the damage is not easily quantifiable.  When thinking about the potential cost of having your identity stolen, consider the following factors:
  • Time – When your identity is stolen, there is a long list of tasks you must complete immediately, including filling out an identity theft report, freezing your credit and requesting copies of your credit report. This takes time, often a lot of time, which takes away from other activities, such as spending time with family or possibly working. You will also need to carefully review your credit report regularly for the next few years to make sure new instances of fraud do not show up.
  • Higher interest rates – Identity theft victims may see their credit scores drop over time after a thief hasused stolen personal information to open a loan or new credit account and thendefaulted on payments.  In the meantime, this means that if your car is totaled in an accident and you apply for a car loan, you may end up paying a higher interest rate due to your damaged credit score.
  • Loss of Opportunity Costs – In some cases, your credit may be so damaged that you cannot even get a loan after an identity theft, according to a survey conducted by the Identity Theft Resource Center. This means you may not be able to buy the renovated condo down the street that is a fantastic deal, but instead pay a higher price next year for a unit in need of an update.
The bottom line is that each time your identity is stolen, you will face unexpected costs, both in dollars and hours. The best solution is to take steps to protect your identity. And spending a small amount each month to help keep your identity secure and prevent widespread damage if fraud is detected can end up saving you a lot of time and money in the long run.

Back to School Tips for Keeping Your Identity Safe

As students get ready to head off to school, perhaps for the first time, it’s important to keep in mind that just because someone is your roommate, it doesn’t mean they’re immediately your trusted friend. An FTC report from earlier this year shows that there were almost 12,000 victims of ID Theft under the age of 19 in 2013. We’ve previously addressed tips for protecting yourself from ID Theft (and we’re certain that most people have heard the basics like ‘don’t save your social security number on your computer,’ ‘don’t share your passwords,’ and ‘don’t leave credit cards lying around’ dozens of times).
Here is a pair of non-traditional tips that incoming students may not consider:
  •   Empty your pockets when you’re doing laundry- For many, dorm living is the first time that they have to do their own laundry. Make sure that important documents (driver’s license, student ID, etc) don’t end up stuck in the spin cycle.
  • Don’t let sticky fingers ruin your day- While it’s nice to think of the community spirit of dorm life, the reality is the some folks are a little less scrupulous than others. Here’s a great article on protecting your devices. 

Large Scale Breach Reported

A security firm based in Milwaukee has announced finding of a massive, 1.2 billion record breach, although it is unclear from the reports just which companies were affected. Also, the company who found the breach seems to be under fire for charging to find out if you were a victim of the breach.

And finally, since the breach seems to have hit e-mail and passwords, here’s a satirical look at creating strong passwords (our actual advice can be found here).