Why Monitoring Your Credit Score Is More Important Than Ever During The Credit Crisis

Posted by Erik on October 2nd, 2008

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As if life weren’t hard enough already during this economic downturn, another side effect of the credit crunch is that your credit score could go down even without any negative information being added to your credit report! That’s right, even if you’re able to continue to pay all your bills on time, and pay off all your credit card balances in full, your credit score may still go down.

Here’s why: a key component of your credit score is the percentage of your available credit that you are using. With lenders, such as credit card companies, becoming more strict in their lending standards, many of them are already lowering credit limits for huge numbers of their customers. Their rationale is that even though nothing has changed with the customer’s credit profile, the bad economy makes the customer a worse credit risk than they were in a good economy.

Okay, fair enough, but now someone that had $25,000 in available credit might only have $15,000. And that person might have used on average $7,500 of credit each month. Even though that person isn’t doing anything differently, they just went from using 30% of their credit to 50%. That’s a big difference that will likely lower their credit score significantly!

Worse yet, since lending standards are now more strict, qualifying for the same loan today vs. a year ago requires a higher credit score. But yours will probably be lowered without even doing anything. Of course, your credit score may go down even further if you’re unable to pay some of your bills on time.

If this all sounds pretty bad, well, it is. But there are some things you can do about it. First, check your mail. By law credit card issuers must notify you of a change to your credit limit.

Second, monitor your credit score. The best way to do this is to sign up for a credit report and score monitoring service. You can read our comparison of credit monitoring services to find the best one for you. Our top pick is Identity Guard, which gives you reports and scores from all three credit bureaus every quarter, monitors any changes to your credit report at the three bureaus daily, and gives you an amazing array of identity theft protection and internet security features. If you think you might be making a big purchase requiring a loan in the near future, you might opt for CreditCheck Total, which gives you unlimited access to all three credit reports and scores, which means you can check your updated credit score every day if you want. All our top recommendations offer free trials so there is no commitment and you can get your credit scores for free.

Third, if you know that you currently have a good credit score, apply for a new credit card. While the limit may not be as high as you would have qualified for a few months ago, whatever credit you do get can help replace the lowered limits on your existing cards. This is an even better idea if you are carrying a balance on your credit card, as you can take advantage of low or 0 introductory balance transfer rates. Read our comparison of the best balance transfer cards to find the best one for you or if you don’t want to transfer a balance, check out our Editor’s Choice of the best credit cards in different categories. Of course, if you’re credit isn’t good, don’t apply for a credit card you think you might be declined for because applying for new credit can lower your score slightly.

We hope you find this information helpful. Check back often or consider subscribing to our RSS feed or email list as we will continue to provide tips to help consumers get through these tough economic times.

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Data Breach Alert: Wells Fargo notifies 5,000 to 7,000 people that their data has been compromised

Posted by Caitlin on August 14th, 2008

Sometime in May or June, a Wells Fargo bank employee access code was used to steal thousands of Social Security numbers, birth dates, addresses, driver’s license numbers and, in some cases, credit card numbers. Only a small number of the impacted individuals were actually Wells Fargo customers.

Wells Fargo has sent letters to most of the impacted individuals notifying them of the breach and offering them a one year subscription to Identity Guard. The bank lacks contact information for about 2,400 of the victims, and is currently in the process of finding addresses in order to notify these people as well.

For more information about Identity Guard or other identity theft protection services, see our reviews and comparison.

• Data Breach Alert: College students receive social security numbers of classmates over email
• Data Breach Alert: Theft puts 13,000 Pfizer employees at risk
• Data Breach Alert: Stolen laptop leaves thousands of Connecticut State students exposed
• Data Breach Alert: Millions at risk for identity theft due to supermarket chain data breach
• Data Breach Alert: Thousands of Dominican University students impacted in secure file breach

Stores neglect to inform customers of credit card breach

Posted by Caitlin on August 12th, 2008

Last week, federal prosecutors revealed that an international ring of hackers had stolen more than 40 million credit and debit card numbers from nine different retailers. Apparently, many of those retailers failed to inform their customers about the breaches, despite laws requiring them to do so. More than 40 states legally require companies to disclose any data breaches, either via letters to the consumers whose data may have been impacted, or through press releases to the media and announcements on company websites. Yet many embarrassed companies neglect to make these announcements.

TJX Companies, whose stores include Marshall’s and TJ Maxx, as well as BJ’s Wholesale Club, DSW and Dave and Buster’s informed customers about the data breach shortly after it was discovered. But Bosten Market and Forever 21 did not. Office Max, Barnes and Noble and Sports Authority refused to say whether they made customer disclosures or not, but it does not appear that they did so.

OfficeMax and Barnes and Noble denied having any knowledge of the breach. Forever 21 and Boston Market claimed that despite being warned by federal authorities, their own private investigations did not confirm that there had been a breach.

When stores don’t even bother telling you that your credit card information has been compromised, the only real protection against identity theft is a service such as LifeLock or Identity Guard, which set fraud alerts on your credit file and monitor any changes to your credit in order to prevent and detect identity theft. For more information about these and other services, see our identity theft protection service reviews and comparison.

• Data Breach Alert: Millions at risk for identity theft due to supermarket chain data breach
• Data Breach Alert: Auto parts retailer exposes tens of thousands
• TJ Maxx to send follow up fraud alert letters to victims
• TJ Maxx may have know about identity theft threat two months earlier than reported
• Data Breach Alerts: No vacation from id theft risk for resort visitors

Reader Question: Can identity theft really be prevented?

Posted by Joe on August 6th, 2008

Q: I have heard there is no way to prevent identity theft. Why should I sign up for one of these [identity theft protection] services if that is the case?

A: While there is no way to prevent all identity theft, some identity theft is completely preventable if you take the right precautions.

We see identity theft protection services, such as LifeLock, Identity Guard and Trusted ID, as one of the key ways that many consumers can greatly decrease the risk of many forms of identity theft. Specifically, many of these services can be very effective in preventing financial identity theft, such as new account fraud, which make up the majority of identity theft crimes reported to the Federal Trade Commission (FTC) each year.

Identity theft protection services also offer varying degrees of recovery assistance for subscribers, typically in the form of a service guarantee. This recovery assistance may include access to recovery experts, covering costs associated with restoring a stolen identity, interacting with the major credit bureaus and more. Every service approaches identity recovery and restoration differently, so it is important to research each service to understand what it does and does not cover in the unfortunate that a subscriber does become an identity theft victim.

Learn more by visiting our guide to identity theft protection services.

• Reader Question: Which identity theft protection service is best if I’ve already been victimized?
• LifeLock’s $1 Million Guarantee - Separating Fact From Fiction
• ID Watchdog identity theft protection service review
• Reader Question: How can LifeLock help me if I have already been a victim of identity theft?
• Identity Theft Shield from Kroll and Pre-Paid Legal Review

Identity Guard adds 30 day free trial and free ZoneAlarm software

Posted by Joe on June 23rd, 2008

Identity Guard, one of our five star rated identity theft protection services, has significantly improved their service by adding a 30 day free trial and the enhanced protection of ZoneAlarm Internet security software. These new features enhance their extensive identity theft detection tools such as three bureau credit report monitoring, access to all three credit reports and scores, fraud monitoring across thousands of databases and $20,000 in identity theft insurance in the unfortunate case that a subscriber is victimized.

While Identity Guard has long offered new subscribers a free second month, this new free trial allows consumers to truly try before they buy and make sure that the Identity Guard service is right for them. New identity Guard subscribers that cancel their subscription before the end of the 30 day free trial period will not be charged any fees at all.

Additionally, Identity Guard has added a free subscription to ZoneAlarm Internet security software with ongoing subscription to their identity theft protection service. We have found that many consumers don’t realize just how big of a threat the Internet can be to their identity. Many criminals use malicious computer viruses, email and phishing scams to gain access to personal information that can be used to perpetrated identity theft. Identity Guard is offering a truly comprehensive online and offline identity theft protection service by pairing their core product with the protection of ZoneAlarm.

We have reviewed ZoneAlarm as part of our Internet Security Software comparison and found it to be an amazingly effective tool at stopping the many dangers that face consumers and their computers while using the Internet.

We continue to strongly recommend Identity Guard for most consumers. learn more about Identity Guard and other identity theft protection services by visiting our guide to identity theft protection services.

• Reader Question: What service is best for protecting my identity and monitoring my credit?
• Identity Guard provides extensive identity theft protection and detection
• Reader Question: How much do credit report monitoring services cost?
• Identity Theft Shield from Kroll and Pre-Paid Legal Review
• NextAdvisor.com credit report monitoring comparison featured in the Wall Street Journal Online

Identity Theft Shield from Kroll and Pre-Paid Legal Review

Posted by Joe on June 18th, 2008

We receive dozens of emails each month asking for our opinion on Identity Theft Shield, an identity theft protection service created by Kroll, Inc and distributed by thousands of independent representatives of the network marketing firm Pre-Paid Legal Services, Inc. We have reviewed Identity Theft Shield and found that it offers solid identity theft recovery support for victims but takes no steps to protect their subscribers from having their identities stolen in the first place.

Identity Theft Shield offers single bureau credit report monitoring of your Experian credit file for $9.95 per month which also includes a free Experian credit report and score at sign up. Experian is the largest of the three credit bureaus and will likely reflect most major changes to your credit report, but we believe that three bureau credit monitoring is a better option since it eliminates the risk that a potentially fraudulent account or entry may not show up on your Experian credit report but end up on one of the other two bureau files in your name. Identity Theft Shield also offers a Gold package which includes credit report monitoring of all three bureaus, including Experian, Equifax and TransUnion, for $12.95. The Gold package also includes a credit report from each of the three credit bureaus at sign up.

Credit report monitoring is a good tool to help identify inconsistencies in your credit report which could be caused by identity thieves, but it doesn’t prevent identity theft in any way. Other services we have reviewed, such as LifeLock, Identity Guard, Identity Truth and Trusted ID, take proactive measures to prevent identity theft crimes from being perpetrated against their subscribers. Identity Theft Shield, on the other hand, offers no tools that actually prevent identity theft.

Identity Theft Shield does offer extensive recovery services to their subscribers if they are the unfortunate victims of identity theft. Identity Theft Shield sets fraud alerts and sends notifications to all applicable government agencies and financial institutions on behalf of the victimized subscriber. They also monitor an extensive list of public and private databases in an effort to identify any misuse of a subscriber’s personal information. Identity Theft Shield’s recovery services also help reduce some out-of-pocket expenses and their fraud resolution specialists are able to handle much of the heavy lifting when it comes to recovering a stolen identity.

Setting fraud alerts and proactively searching national databases for suspicious activity are both great services for victims, but they are also extremely effective in preventing and identifying potential identity theft crimes. In fact, many of the other services we have reviewed offer these tools to all subscribers as preventative measures rather than after a crime has already been committed as identity Theft Shield does.

The lack of proactive identity theft prevention measures is the biggest downside to the Identity Theft Shield service. We do believe that it is a good service for victims, but many of the solutions they offer to help recover a stolen identity are used by other identity theft protection services to actually prevent identity theft in the first place.

We would suggest LifeLock or Identity Guard over Identity Theft Shield for most consumers. Both services received five stars on our comparison of identity theft protection services and, in our opinion, both deliver more extensive levels of service than Identity Theft Shield.

LifeLock offers proactive identity theft protection by setting fraud alerts on your credit file, monitoring the Internet for unauthorized use of your personal information and alerting you if anyone attempts to reroute your postal mail in an attempt to gain access to sensitive correspondence such as financial records. They also provide a fairly extensive service guarantee which will cover most costs and all the heavy lifting related to recovering your identity if it is stolen while you are a LifeLock member. This guarantee does have its limitations, which we have previously analyzed, but overall we feel that LifeLock is a more complete identity theft protection solution than Identity Theft Shield.

Identity Guard is another option, particularly if credit report monitoring is important to you. They provide 24/7 credit report monitoring of all three credit bureaus and quarterly access to your credit report from Experian, Equifax and TransUnion. Identity Guard also offers a series of advanced tools which help prevent and/or identify any unauthorized uses of your personal information. Plus, Identity Guard offers a $20,000 insurance policy which covers many costs in the case you that a subscriber fails victim to identity theft.

You can sign up for LifeLock and Identity Guard online or over the phone and both services offer a 30 day free trial of their product. Identity Theft Shield does not offer a free trial and can only be purchased by contacting a Pre-Paid Legal independent sales representative.

Please visit our identity theft protection service comparison to learn more about these identity theft protection services.

• Kroll Identity Theft Shield identity theft protection service review
• Data Breach Alert: Blue-Cross notifies thousands of of identity theft concerns
• FreeCreditReport.com offers 30 day trial of the cheapest three bureau credit monitoring service
• Reader Question: How much do credit report monitoring services cost?
• NextAdvisor reviews Identity Truth

Reader Question: How much do credit report monitoring services cost?

Posted by Joe on June 4th, 2008

Q: I see that most of the credit reporting monitoring services on your website offer a free trial. How much do they cost after the free trial is over?

A: While free trial periods are great to evaluate whether or not a particular credit report monitoring service is a fit for your life, it is important to realize that once the trial period is over you will have to live with the monthly fee.

Below is a list of the free trial periods and monthly fees of the top five credit report monitoring services we have reviewed. We have also included information on what credit report and score data you receive when you sign up. This is important because in almost all cases you get to keep the initial credit report and score information your receive during your free trial.

Equifax offers a 30 day free trial and costs $14.95 per month thereafter. Upon sign up you will receive a free FICO score and free 3-bureau credit report which are yours to keep even if you decide to cancel during the free trial period.

CreditCheck Total offers a 7 day free trial and costs $14.95 per month thereafter. Upon sign up you will receive free reports and scores from all three credit bureaus which are yours to keep even if you decide to cancel during the free trial period.

Identity Guard does not offer a free trial, but will give you your second month for free. The ongoing monthly fee is $11.99. Upon sign up you will receive free reports and scores from all three credit bureaus.

FreeCreditReport.com offers a 7 day free trial and costs $12 per month thereafter. Upon sign up you will receive a free Experian credit report and score which are yours to keep even if you decide to cancel during the free trial period.

Privacy Matters 123 offers a 7 day free trial and costs $19.95 per month thereafter. Upon sign up you will receive free reports and scores from all three credit bureaus which are yours to keep even if you decide to cancel during the free trial period.

To learn more about credit report monitoring services visit our credit report monitoring service reviews and comparison.

• Reader Question: Am I entitled to a free credit report each year?
• Equifax offers free 3-in-1 credit report and 3 bureau credit report monitoring
• FreeCreditReport.com offers 30 day trial of the cheapest three bureau credit monitoring service
• Reader Question: How do I get my FICO score for free?
• NextAdvisor.com credit report monitoring comparison featured in the Wall Street Journal Online

Reader Question: Are credit bureau fraud alerts still available?

Posted by Joe on April 1st, 2008

This post is another in our ongoing series of “Reader Questions”. if you have a question of your own on any of the services we cover please use our contact form to let us know.

Q:With respect to the Identity Theft company comparisons that you provide, Identity Guard states the following during an enrollment process:

As of April 2, 2008, the Credit Bureau Fraud Alert feature will no longer be offered through your Identity Guard service.

It seems to me that without this important feature, they are no longer worth the higher cost of $14.99 cost per month.

Have the other services such as LifeLock also discontinued this feature?

A: You are correct in that Identity Guard is in the process of discontinuing their fraud alert feature. They are the only service that we are aware of that is planning to discontinue fraud alerts. LifeLock most certainly still allows their members to set fraud alerts as a part of their identity theft protection service.

Identity Guard will continue to provide three bureau credit report monitoring that will allow you to monitor chanegs to your credit report with Experian, Equifax and TransUnion. This is a service that LifeLock does not provide, although LifeLock will give you one free credit report per year as part of the annual credit report program.

If fraud alerts are important to you, and we feel that fraud alerts are a very important part of preventative identity theft protection, then LifeLock is the best service from our perspective.

• NextAdvisor reviews Identity Truth
• Reader Question: How do I set a fraud alert on my credit report?
• Reader Question: What should I do if I think I have been a victim of identity theft?
• Identity Theft Shield from Kroll and Pre-Paid Legal Review
• LifeLock receives 5 star rating from NextAdvisor.com

Identity Guard Good Start review launched on NextAdvisor.com

Posted by Joe on February 28th, 2008

Identity Guard’s Level 4 Protection service has been a five star rated service provider on our identity theft prevention service guide since we launched it last year.  We are now happy to announce that we have completed a review of ID Guard’s “Good Start” service which has also garnered a five star review.

Good Start is similiar to Level 4 and other top rated services, such as LifeLock, in that it offers extensive proactive identity theft protection features such as fraud alerts for each of the three major credit bureaus.  Good Start also offers a unique benefit in credit monitoring of your Equifax credit file and at only $4.99 it is the cheapest identity theft protection service on the market.

That bargain price does comes with slightly fewer “frills” than many of the other identity theft protection services we have reviewed.  For example, Identity Guard Good Start does not include additional benefits such as mail list removal, free credit reports or identity theft insurance.

That being said, it is definitely the cheapest way to get high quality preventative identity theft protection with credit report monitoring.  We think it is a great service and highly recommend it to our readers.  You can learn more about Identity Guard Good Start by reading our full review.

• Identity Guard adds 30 day free trial and free ZoneAlarm software
• Kroll Identity Theft Shield identity theft protection service review
• NextAdvisor reviews Identity Truth
• Identity Theft Shield from Kroll and Pre-Paid Legal Review
• Identity Guard provides extensive identity theft protection and detection

Is your state putting your identity at risk?

Posted by Joe on February 19th, 2008

Major data breaches continue to occur at an alarming rate and identity theft is on the rise but eleven US states still have no formal data breach disclosure laws on the books. This lack of legislation could be putting residents at a higher risk of falling victim to identity thieves.
California was the first state to enact laws that spelled out how companies must disclose data breaches to impacted consumers. The ground breaking law, known as the California Information Practice Act or Senate Bill 1386, requires any company that stores the personal information of California residents to notify those consumers if their data has been or may have been exposed. Personal information includes things like your name, credit card numbers, social security number, account numbers or PINs.
Thirty-seven other states have followed California’s lead and passed data breach related policies that require similar disclosure to protect the residents of their states. However, New Mexico, South Dakota, Iowa, Missouri, Kentucky, West Virginia, Virginia, South Carolina, Alabama, Mississippi and Alaska still have no disclosure requirements in place to protect consumers.

A twelfth state, Oklahoma, only requires disclosure by government agencies and not private companies in a the case of exposure of personal information. Therefore, the protections to Oklahomans are significantly limited.

It is unclear why these states aren’t moving more aggressively to protect their residents. However, it is clear that the most important things for consumers that are impacted in a data breach to to have quick and complete disclosure so that they can take steps to safeguard their identity from thieves.

We strongly believe that the best way to protect yourself from identity theft is by using a proactive identity theft protection service such as LifeLock or Identity Guard. You can read more about identity theft prevention and protection in our identity theft protection service comparison and reviews at NextAdvisor.com.

• Napa, California named worst town for identity theft
• California identity theft protection guide: facts, trends and resources
• How does your state credit score rate?
• Arizona identity theft protection guide: facts, trends and resources
• Data Breach Alert: Thousands of California students at risk for identity theft