DECODING YOUR CREDIT – Part III PROTECT YOUR CREDIT
In this series on credit, we’ve taken a look at understanding the basics of a credit score and methods to boost your score. This post will teach you strategies for protecting it, and finally the series will end with a Q&A session with Jessica, a Mortgage Banking Officer with BBVA Compass.
PROTECT YOUR CREDIT
Either you have a great credit score or you are working hard to get one. Keep moving in the right direction by actively protecting your credit and corresponding score. Protecting your credit is really a two-part quest. First, you need to keep up the positive credit habits you found out about in Part I and Part II of this series on Credit. The second step is protecting it from all the bad guys out there who want to get their hands on your credit.
Practice Good Credit Habits
Since you already know the elements of a credit score, think about how your actions can affect your score. If you have a good score, you can easily protect it by paying your bills on-time and not maxing out your cards. If you are working with a business who asks for your SSN, ask them what they are going to do with it. Ask them if they are going to do a hard or soft pull. Think about what you are pursing and if it’s really worth it to you to have a hard pull go on your credit report.
Keep Close Tabs Your Credit Report
By law, you’re entitled to one free credit report, every year, from each of the three credit reporting agencies (Equifax, Experian and TransUnion). Pick a date, mark your calendar and pull your free credit report every year. It’s easy to do and it literally takes five minutes. You can get all three reports from the same site: https://www.annualcreditreport.com.
The annualcreditreport.com will show you just your credit reports. However, my personal favorite is CreditKarma.com. Credit Karma lets you view your credit score and report from both TransUnion and Equifax. What I really like about it is that it shows you what specific factors are helping or hurting your score and/or credit report.
I don’t use a credit monitoring service because I feel that I can closely monitor my own credit. In addition to pulling my annual credit report and using Credit Karma, all three of my credit cards provide a monthly credit score. Every month when I review my statement, I take a peek at my credit score. It’s an easy way for me to keep tabs on my score and watch out for anything fishy. If you’ve recently been a victim of identity theft or you’re the type of person who just isn’t going to keep tabs on their credit, maybe you would benefit from credit monitoring.
Secure Your Online Accounts
No matter how careful you are, it’s almost impossible to have never been targeted by online hackers. Whether it’s your work goofing up and releasing a list of employee SSNs, your favorite online retailer gets hacked along with your password, or spammers are trying to trip you up with their sneaky e-mails, you need to be constantly vigilant of your online info.
My employer recently taught a class on strong passwords. We learned that the hackers who are trying to crack your password are often just using brute force methods where their software tries every possible combination to figure out your password. Passwords with over 20 characters are harder to crack. A normal sentence can be used as a password on many sites. For example, “I got friends in low places!” is a secure password. You can up the ante by using “I g0t friend$ in low places!” If the site you are logging into won’t let you use a long password, try a password without dictionary words, for example, iG0filp! This example is case-sensitive, uses number, letters and special characters, and doesn’t have any dictionary words.
Be Careful With Personal Information
When you are finished with sensitive documents that have things such as social security numbers, account information, and other Personally Identifiable Information (PII), get rid of it safely. Use a shredder, black it out with a sharpie, burn it, whatever, but don’t just crumple it up into a ball and trash it.
Bad guys aren’t always after your old data either. My brother’s USAA accounts were drained after a thief stole the outgoing mail he had put in his mailbox the night before. Although he normally banks online, he was making the first mortgage payment on his new home and the thieves got their hands on lots of his USAA account information. You can combat incidents like this by going paperless or by using secured USPS mailboxes instead of your personal mailbox when you have outgoing mail with sensitive information.
Protect Your Child’s Credit
Initially I thought it would be ideal to lock my son’s credit until he’s ready to start using credit on his own when he’s older. However, I learned that the credit bureaus do not knowingly keep credit reports for minors since they should not have any credit history. If for some reason, they do have a credit file you can add a fraud alert or freeze your child’s credit file until the time comes when they are ready to reopen it.
Expert opinions differ on whether or not it’s better to freeze a minor’s account (which might mean creating a credit report) or not having a credit file at all for your child. If someone tries to open credit with your child’s SSN, a lender should see that they are not only a minor via their birthdate but another red flag would be that they have never had credit, thus there is no report. If your child has been a victim of credit fraud, it’s important to get their report cleaned up and after that time, putting a freeze on it would be helpful. Each of the three credit reporting bureaus have information on how to find out if your child has a credit report and if so, instructions on how to freeze it.
Next week, we’ll hear from Jessica, a Mortgage Banking Officer from BBVA Compass on her expert advice on credit scores and home mortgages. If you have specific questions you’d like Jessica to answer, send them into me and we’ll get them answered!