Your credit score and your financial identity affect everything in your life, and you should protect them both. Here’s why and how.
Your credit score affects loan rates, including for your vehicle and mortgage, credit or debit cards, even a college loan for your son or daughter. Something as minor as a single late payment can stay on your credit history for three years and affect your credit rating.
Federal law requires the three top credit reporting agencies – Equifax, Experian and TransUnion – to provide one free credit report a year. Apply only at AnnualCreditReport.com. Beware of similar sounding website names where you will be charged a fee, or worse, become a victim of identity fraud.
The credit reporting website Credit Karma also provides free credit scores. My adult son got a Discover card mainly for its free perk of a credit score included in the monthly statement.
As for identity fraud, your personal information is under constant threat from global scammers who can empty your bank account in a nanosecond. More than 70 million shoppers were affected in 2013 by a major security breach at Target. It was bad enough that the company offered those customers three years of free identity fraud monitoring.
The largest identity protection service, LifeLock, charges $10 to $25 a month, depending on level of service, including whether it’s an individual or family plan. AARP identity protection is $9.17 to $24.99 a month for those 50 and older. Both offer a free trial period of up to 30 days. The AARP plan includes lost-wallet protection and court records monitoring.
Credit Sesame is a new free financial website, launched April 14, 2014, that combines free credit reporting and identity protection. The site also offers a feature that allows you to compare mortgage and refinancing rates, and bank interest and credit card credit rates for your personal financial situation. Credit Sesame also alerts you if something in your financial life changes.
The advantage of a single service is that you avoid having your personal information across multiple websites. The disadvantage is having all your personal financial information on a single website.
So how does such a free service afford to stay in business? If your financial situation is such a shambles that you help to fix it, they’ll do that, for a fee.
Final tips: It’s important to check your credit report regularly. Make that part of your year-end or tax-time schedule. And check your credit score well in advance of applying for a loan or mortage, so you have a few months or more to improve it.