The Federal Trade Commission notes that close to 10 million Americans are victimized by identity theft annually; the average cost of recovering from identity theft runs nearly $5,000 per victim. As white collar criminals become more sophisticated, law enforcement officials expect this type of crime to increase further from existing levels. One of the best ways consumers can protect themselves from becoming victims of identity theft is through a credit monitoring program.
Many companies provide credit monitoring services for a price. While the particulars of the service varies somewhat by credit monitoring company, the basic premise is that these services track activity on your credit reports that are kept by Equifax, Experian, and TransUnion, the three major credit bureaus. Alerts are quickly issued to you if there are any changes to your credit files, including alterations to personal information such as your address. In this way, you will know if someone other than yourself is involved in any activity which could ultimately hurt your credit rating or cause you financial trouble.
In addition to keeping you informed of any activity within your credit files, credit monitoring services will offer you periodic copies of your credit reports, provide you with a certain amount of insurance in the case of identity theft, and help you if you should become the victim of identity theft. The monthly fees that credit monitoring services charge can vary considerably, but most range from $5 to $15 monthly.
You can also choose to monitor your credit records yourself and avoid the fees charged by these services. By law, you are entitled to one free copy of your credit report from Equifax, Experian, and TransUnion each year. Although these free reports won't show your actual credit score, they do show all of the details that go into computing your credit score, including the length of time you have had each account and your payment history for each account. Make it a habit to request these reports once each year and inspect them carefully for anything suspicious.
If you want your credit to have an extra layer of protection, consider adding a fraud alert to your credit file at each of the three credit reporting bureaus. This alert puts a system in place so that no creditor can open up a new account using your information without first speaking to you by phone. Fraud alerts remain in effect for 90 days, and you must contact each of the three credit bureaus individually to set up these alerts as a part of your credit monitoring system.