Debt Free

Getting debt free is hard enough. It's even more difficult when the debts in question aren't yours. If you've ever been a victim of identity theft, you'll know exactly what I mean. There are some advanced techniques you can use to combat identity theft. That can help you avoid that sinking feeling you'll get when you realize that new Dell laptop on your Visa statement isn't the one you bought 6 months ago, but one someone in Ohio's now bragging to their friends about.

Besides the usual identity theft tips, there are other things you can do to make sure your identity, and your good credit, stays yours. I posted on this subject back in December in a post about freezing your credit. That can be very effective in preventing a thief from opening new accounts using your personal information, because it prevents anyone from pulling your credit report. Typically no one will give you a new credit account without first checking your credit history. If you find someone that will, be sure and let us all know. Beyond freezing your credit there are other steps you can take to protect your credit and make sure all your debts are really your debts. This is especially important if you think you may have already been a victim.

Step 1 – Get a copy of your credit report from at least one of the major credit reporting agencies, so you'll have a baseline. As an added bonus you'll be able to clear up any erroneous credit report entries you may find. You can do this by contacting either Equifax, TransUnion, or Experian. They also have a website dedicated to supplying you with your credit report. It's here.

Step 2 – Put a fraud alert on your credit report. Fraud alerts come in two varieties; extended and initial. You need to contact only one of the credit reporting agencies to accomplish this. By law they're required to contact the other two agencies for you. The difference between extended and initial alerts is as follows: Initial lasts for 90 days and is the appropriate step to take if you think you have been, or may soon be, an identity theft victim. When the alert is placed upon your report, you'll then be entitled to 1 copy of your credit report in the next year form each of the 3 reporting agencies.

On the other hand, an extended alert, as the name suggests, lasts much longer, 7 years. With an extended alert, you're able to receive 2 copies of your credit report annually from each agency. An extended report requires you've actually been the victim of identity theft and have filed an identity theft report with a law enforcement agency. Now a prospective creditor is required to actually physically verify your identity before it can issue you new credit. Sounds like something that should be done every time, anyway. Then the incidence of this sort of theft and bogus credit use would drop drastically. You know what I'm going to say - “Call your legislator, now.” In most cases you'll have to file a local report in the jurisdiction where the theft occurred. For example, in one of my businesses, we had someone in Illinois use a credit card fraudulently obtained from someone in Washington State. We had to file a report with the authorities in Illinois in order to recover our damages from the credit card provider. Thankfully we'd used address verification (we did that with all our orders) and were informed the address was a valid shipping address before we sent the merchandise. That's why you should set up your credit cards to only allow online orders to be delivered to the billing address. For more information on this sort of credit protection, see the Federal Trade Commission's website.

Step 3 – To avoid identity thieves from circumventing address verification by using stolen information to change your credit card's billing address, you should contact your bank or credit card issuer to obtain a personal security code. Now in order for someone to alter any information on your account or use your account, they'll have to know this secret code in addition to your PIN, SSN or other personal information they may have fraudulently obtained.

Other preventative measures you can take to safeguard yourself against this problem are:

1 - Encrypting personal information files on your computer. Microsoft Vista and XP Pro allow individual folders to be assigned passwords so they can't be opened by unauthorized personnel. Keep a list of all your credit accounts in such a folder for easy access so you can notify all your creditors in the event of a problem.

2 – Write the following words on the signature line of your credit cards with a Sharpee permanent pen “Please Check ID” and make sure clerks at any retailers follow the request.

3 – Never have your SSN or driver's license number printed on your checks. Talk about a goldmine for ID thieves! Now they have your bank account number, address, name, SSN, and DL number in one convenient location.

For even more great information on preventing identity theft, see some great identity theft posts by Free Money Finance.