How to Protect Your Credit & Identity Online

Whether buying a special gift for someone, applying for a new loan or line of credit, or simply doing your everyday banking, shopping, and browsing online, it’s a good idea to establish habits that will protect your identity and your credit – and ultimately yourself and your family.

You don’t have to (and shouldn’t) wait for a big data breach like the one from Equifax to start thinking about credit and identity safety. To help out, we’ve put together a list of some of the best ways you can keep tabs on your accounts and public information.

Opt Out of Prescreened Offers

Nearly everyone gets preapproved offers in the mail – they’re practically the only thing keeping the U.S. Postal Service going these days! And the vast majority of those offers get thrown away (or recycled, hopefully).

The problem is that preapproved offers can lead to identity theft. Scammers have been known to steal unsolicited credit card offers right out of people’s mailboxes and open accounts in unsuspecting victims’ names.

The best way to prevent this type of fraud is to opt out of prescreened offers (which includes both “preapproved” and “prequalified” offers). This is allowed by the Fair Credit Reporting Act, and in compliance with that bit of legislation, the major credit bureaus have set up a process for you to do that:

Note that it can take up to 30 days for your request to be processed. Once you are on the opt-out list, you will remain on it for five years.

Opting out of prescreened offers is relatively painless, and of course you can still submit credit applications for new credit cards, loan or other financing any time you want. Opting out can even save the environment (a little) by cutting out paper waste, so there’s really no downside.

Credit Monitoring

Credit monitoring is exactly what it sounds like: monitoring your credit reports and statement for anything that looks suspicious. You can do this yourself, or you can hire a credit monitoring service to do it for you.

Monitoring Your Own Credit

For financial DIYers, keeping tabs on your own credit is totally doable. It’s mostly about consistency and meticulousness: If you stay on schedule, it’s unlikely something important will escape your notice – so long as you use all the tools at your disposal.

Those tools include:

Online/Mobile Banking: If you do not use online banking websites or mobile banking apps on a regular basis, then you’re missing one of the best tools to monitor your finances. At minimum, you should review activity weekly to make sure everything is correct.

Fraud/Balance Alerts: Most banks and credit issuers offer some type of alert for things like low balance/low credit limits, large transactions, and unusual activity. Make use of these handy tools to be warned right away that something suspicious might be underway.

Statements: Statements are more than just a reminder that you have to pay your bill! They list all transactions that occurred during the reporting period. If you’re monitoring your accounts weekly through online/mobile banking, then there should be no surprises here…but that doesn’t mean you should skip looking at it. Consider it a double-check to protect yourself.

Credit Reports: By federal law, you are entitled to one free credit report from each credit bureau per year. You can access your reports from AnnualCreditReport.com (not FreeCreditReport.com, which is owned by Experian). Negative items will be listed near the beginning of the report, but you should still look over all accounts and personal information and file a dispute for inaccurate information. Note that you can also get a free credit report within 60 days of being denied credit for any reason, regardless of whether you have received a free report in the last 12 months.

Pro Tip: Stagger your three major credit bureau reports throughout the year (one every four months). While information can vary somewhat from one report to another, staggering them makes sure you have fresh information every few months instead of every year.

The above may seem like a lot, but I promise, it’s not. If you make it a habit to do these things regularly, then the chances of fraudulent or unexpected activity going unnoticed is very small.

Credit Monitoring Services

Even if you monitor your accounts through online/mobile banking, statements, and credit reports, you may still want to sign up for a credit monitoring service. In addition to monitoring your credit report for changes – such as new accounts, credit checks (inquiries), and potentially negative actions – they may also provide services that you cannot do easily on your own.

Note that the actual features provided by a particular credit monitoring service will differ. Some of these features are “add on” services that you will need to pay extra for.

Credit Report Monitoring: The biggest advantage to paying for a credit monitoring service is that they will monitor your major bureau credit reports regularly. You won’t need to wait and stagger your free annual reports. They will notify you of changes, which you can then review.

Credit Scores: Another thing credit monitoring services offer is access to fresh credit scores. While these scores many not give you specific information about bad transactions or potentially fraudulent activity, if you notice a sharp drop in your score, that can be a definite red flag that something is wrong. Note that many banks and credit issues offer access to your credit score without paying extra, and the Consumer Financial Protection Bureau has information about other ways to get your score for free.

Consumer Finance Protection Bureau

How to Get Your Credit Score

Identity Theft Help/Insurance: Some services offer help in case your identity is stolen while you are subscribed to the service. Help can come in many forms, including access to lawyers and financial experts, as well as insurance coverage to pay for costs incurred due to an identity theft situation.

Forum, Social and “Dark Web” Monitoring: Some credit monitoring services are now advertising their ability to scan forums, social media, and the so-called “Dark Web” for people who are selling illegally credit card numbers, account details, Social Security numbers, and other personally identifiable information. These services are still relatively new, so it’s hard to say whether they are worthwhile, but it seems likely this type of thing will increase in the future.

If you find any or all of these services compelling, paying for a credit monitoring service may be worthwhile to you. Just make sure you understand which services you are enrolling in, and how much they cost, before ordering!

Locking Your Credit

Want to be extra sure your credit is safe? There is a nuclear option, of sorts. Specifically, there are three ways you can prevent creditors from accessing your credit reports and opening new accounts in your name.

Keep in mind that these will prevent all new credit accounts from being opened. If you need to open a new credit card, apply for a new loan, or are looking to buy a home, car, or other large purchase with financing, you will need to remove the freeze/lock first or provide additional identity verification for fraud alerts.

Credit Freeze

A credit freeze requires you to call each of the major credit bureaus (TransUnion, Experian and Equifax) on your own to place the freeze. This effectively stops potential creditors from receiving your credit report. Sounds good, right?

The downside: Credit freezes cost money, anywhere from $3 – $10 per freeze. What’s more is that it may cost you again when you unfreeze your account, and then a third time to freeze again (if you choose to do so). In some instances, victims of identity theft may be able to have the credit freeze fee waived. Costs and laws vary widely by state, so you may have to do your homework before looking for a freeze.

Credit Lock

A “credit file lock” or “credit lock” is similar to a credit freeze, with the primary difference being how the lock is done. While a credit freeze requires calling the credit bureau and setting up a PIN, credit locks can be done online or through a mobile app.

However, credit locks are generally only available through premium credit monitoring services, which are often about $20 per month. Also, credit freezes are better regulated than credit locks, giving freezes clearer legal requirements and obligations.

Fraud Alerts

A fraud alert is a bit more permissive than a credit freeze (or lock) in that it allows creditors to still obtain credit information. The difference is that they need to take appropriate steps to verify your identity before they can issue a new credit account.

Types of Fraud Alerts

Initial Fraud AlertExtended Fraud AlertActive Duty Military Alert
Protects your credit file from unverified access for 90 days. Generally used as a preventative measure if you lose your wallet, Social Security card, or other personal information.Protects your credit file from unverified access for 7 years. Used by victims of identity theft to prevent new credit accounts from being opened by identity thieves and other fraudsters.Protects your credit file from unverified access for 1 year (renewable for the duration of deployment). Used by military personnel who are on active duty, especially if deployed overseas.

While freezes/locks can be placed on your credit file indefinitely, it’s important to note that fraud alerts will run out after a specified period of time. Some fraud alerts can be renewed – such as the active duty military alert – but may require additional documentation as to the necessity of the alert.

Remember: Credit freezes, locks and fraud alerts only prevent new credit accounts from being opened. If your credit card or bank account information falls into the wrong hands, they may still be able to access already open financial accounts.

Know About Specialized Credit Bureaus

Everyone knows about the “Big Three” credit bureaus: Experian, Equifax and TransUnion. Many people may know about one or two others, like Innovis or CheckSystems.

What most people don’t know, however, is that there are dozens of smaller bureaus that specialize in various types of credit reporting. These include bureaus that report on:

  • Bank deposit accounts (checking, savings, CDs)
  • Work history
  • Tenant history
  • Utilities (electricity, gas, water, etc.)
  • Insurance
  • Medical bills/information

These services are all regulated by the Fair Credit Reporting Act, just like the big players. Not only can you request a free annual report, but if you’ve been denied for a new checking account, apartment, employment opportunity, or some other account based on a report from one of these services, you have the right to request your report from them as well.

For a list of some of the smaller credit bureaus you should be aware of (including contact information), see our Scams and Fraud page.

Keep Your Credit and Identity Safe!

Protecting your credit and identity is just like protecting anything else: It requires diligence, practice and good habits. Fortunately, all of those things are possible for pretty much everyone, as long as you put in a little effort!

Just remember that whatever effort you put in now, you’ll still be saving yourself a lot of grief (and money) in the event of an identity theft or fraud attempt. Take the right steps now, so you don’t find yourself on the wrong path later.