Identity Theft Prevention Tip

It’s the New Year and here is something to add to your resolutions: Copy the contents of your wallet.
WHAT:
1) Take all items out of your wallet – license, debit and credit cards, insurance, membership IDs.
2) Place them all face up on a copy machine. Make a copy.
3) Flip them all over in place and make a copy.
4) Lock the copied page in a safe place in your home or office with your other secured personal documents.

NOTE: Do NOT carry your Social Security Card in your wallet. That number is like gold to identity thieves.

WHY:In the event that your wallet is lost or stolen, you will know exactly what was in there and who to call to notify. The copied sheet will have all of the account numbers with name and expiration date on the front; security codes AND the customer service number to call on the back page. This will save time and frustration when contacting the companies to notify them of the loss.

This is an easy step to take to make life easier if you ever lose your wallet. A few minutes of your time is an opportunity to clean our your wallet, cut down on the number of items you carry, and have your important identification and financial information in one place should you need it.

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Predatory Credit Cards

We received a call from a former client about a credit card offer they received in the mail. Because they have been in rebuilding their credit for more than a year, they know that having open revolving accounts in good standing is important to getting better credit scores.  However, the annual fee on this particular account was $175. Yes, that’s right – $175. And of course that is immediately charged on the card and is then subject to the account’s interest rate, which happens to be 39%!

This is an example of a predatory credit card. Companies know that American consumers realize the importance of having a good credit rating. They also know that many people have struggled financially over the past few years and their credit scores have taken a hit. So they are offering a new credit card to these consumers, well aware that they probably aren’t getting any other offers for decent accounts with significantly lower fees and interest rates.

We strongly recommended that this person NOT accept the credit card offer. Instead, they could put their $175 toward a Secured Credit Card. Secured Credit Cards can be an effective way for consumers to rebuild their credit with a reputable financial company that reports to the credit bureaus.

A secured credit card requires you to open and maintain a savings account as security for the line of credit. The amount required for a secured card typically starts at $300 to $500. Some banks and credit unions will pay interest on your deposit comparable to what you would be getting if you opened a regular savings account. There may be application and processing fees. Typically, a secured card requires an annual fee and has a higher interest rate than an unsecured card.

NOTE: Some companies are using deceptive advertisements for secured credit card to make money. These deceptions include using a 900 number that is not toll-free, but actually costs money to call. They also typically leave out the list of charges and fees associated with the secured credit card they are offering. Get more information here from the Federal Trade Commission.

Check with your local bank or credit union to see if they offer a secured credit card. Wells Fargo and Bank of America are two national chains that have this product available. BankRate.com has a list of online Secured Credit Card lenders. Keep in mind that these companies probably pay bankrate to be listed on their website.

Questions to ask when applying for a secured credit card:

What are the total fees (application, monthly and annually) and will they be refunded if you are denied a card?

What is the minimum amount you need to deposit to obtain the card?

How much interest will the deposit earn, and what kind of account does the deposit have to be in?

How long does the money have to stay on deposit after the account is closed? (Some banks will want to keep the deposit for a couple of billing cycles to cover any stray charges that arrive.)

How long does it take to qualify for an unsecured card? (Most banks will qualify you for an unsecured card after a period of making all your payments on time.)

Do you report to all three credit bureaus? This is extremely important when using the credit card as a tool to build or re-establish your credit record. If your card issuer does not report to a bureau, the card will not help you build a credit history.

REMEMBER: THIS IS A TOOL TO BUILD YOUR CREDIT RATING. THIS IS NOT AN ACCOUNT TO CARRY BALANCES ON. After receiving your new card, use it once for a small purchase ($25-50). PAY THE ENTIRE BILL AS SOON AS IT ARRIVES!! Do not use the card again. Put it away in a safe, secure place and use it once every three months in the same manner. This will keep it active and save you money on interest charges.

With more and more people facing financial struggles, many are no longer using credit cards. In fact, CNNmoney.com reported that 8 million people stopped using credit cards in the past year.  As the income from those lucrative credit card accounts continues to shrink, companies will be looking for ways to increase their revenue in the current market. Offers of credit cards with excessive fees and interest rates will continue. Before you jump in, know that there are other options. A Secured Credit Card may be the financial tool for you.

 

 

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Paying Collection Accounts

Someone just called to get information about building their credit scores so they can purchase a home.  Then they said that they paid off three collection accounts the day before calling us.  They were small amounts and it was easier to pay $50 than to dispute it.  That should help their credit, right??  Not Usually.

PAYING OFF A COLLECTION ACCOUNT DOES NOT MAKE IT DISAPPEAR FROM YOUR CREDIT REPORT.

A paid collection will stay on your credit report, even when it has a zero balance.

Any account that has the notation of ‘collection’ is a negative item and will count against your scores.

WHAT TO DO
1) Find out if the account is legitimate and is even yours.  There is a statute of limitations (SOL) for collecting accounts and it is based on the original date of the service or the transaction that led to the alleged debt.  Learn more about SOL here.

NOTE: The Credit Info Center has more information on each state’s statute of limitations.

2) Once you determine it is legit and you are going to pay it, negotiate for your credit rating while negotiating the amount to pay.

This article has more information to assist you in this process.

3) Get everything in writing.  Do not give any of your money over until you have written confirmation about the terms of the agreement you just made.

4) Check your credit reports in two months to be sure the account has been removed and/or is reporting accurately.

As a consumer, we all have rights and it is usually worth the time and effort to exercise those rights.  Yes, paying a $50 collection account may be quick and easy, however, it can keep credit scores lower causing higher interest rates that can cost MUCH more than $50.

 

 

 

 

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Holiday Travel

 

If your holiday plans include traveling, be sure to read these tips before you go.

1)  Clean out your wallet by removing unnecessary credit cards, your Social Security card, and other unneeded documents that could compromise your identity if lost or stolen while on vacation.  If you have a Medicare card, make a photocopy without the last 4 digits of your Social Security number and leave the original at home.

2) Photocopy the remaining contents of your wallet, front and back of each item. Keep it in a secure and locked location or with a trusted individual at home whom you can contact in case your wallet is lost or stolen.

3) Decide on two credit cards to take with you. Carrying too many credit cards will subject you to additional aggravation if your wallet is lost or stolen.  However, by having two cards, you reduce the risk of being stranded or inconvenienced if one of your cards inadvertently becomes inactivated due to suspected fraud or if the magnetic strip becomes damaged.

4) Call your bank and credit card companies to let them know when and where you will be traveling. Their fraud departments may then monitor your accounts for unauthorized transactions during this time and it will be less likely that they will ‘freeze’ your account for unusual activity in a place different from your previous transactions.


5) Use traveler’s checks or credit cards for payment. Leave your checkbook in a secure locked place at home.


6) Do not use or carry any debit cards, alson known as check cards. This reduces your vulnerability to having your checking account emptied while you are on vacation.  The Privacy Rights Clearinghouse has a
reference sheet about the potential risks of using debit cards.

7) If you are going to use an ATM card during your vacation, choose one that does not have debit or check card privileges.  That means one that always requires a PIN and does not contain a Visa or MasterCard logo.  You can ask your bank to change an ATM/debit card to one that is “ATM only.” It’s best to use ATM machines found at banks or credit unions that are in well-lit areas. Be sure to examine the ATM machine carefully for signs of tampering.  Be on the lookout for anything that looks suspicious and
find a different machine to use if you are not sure.


8) When dining in a restaurant, keep an eye on your credit card when you pay your bill. If the server removes your card from sight, they may be able to create a “clone” by using a portable card skimmer that will copy the information from the card’s magnetic strip.  Skimming has become a major identity theft tool;
this article has more information on how to protect yourself from potential fraud.

9) Do not leave your wallet or any documents containing personal information in your hotel room unattended as many people have access to the room.  Use a hotel safe when available.


10) Be careful when using a laptop computer to access online banking or other password-protected services from Wi-Fi networks. Be sure to use Wi-Fi hotspots that are secure.
Click here for Wi-Fi tips from the FBI.   If you are using cyber-cafés, hotel business centers, or other public access Internet facilities, be aware that keyloggers (software that can track your keystrokes) may be tracking you. Public access facilities may use servers that aren’t encrypted. Therefore, it is best to never access any sensitive information from a public computer.

11) Request a
mail hold through your local Post Office or ask a trusted neighbor to gather and hold your mail for you. Mail that is left in an unlocked mailbox is a goldmine for identity thieves. It also sends a signal to potential burglars that your house is vacant.

12) Use caution about the information you share on social networking sites. You wouldn’t put a sign on your front door saying “Away on Vacation”. When you broadcast your travel plans on a social networking site, you are doing the same thing electronically. This information can then be used by criminals who will know that you will be away from home.  Consider posting comments and pictures relating to your vacation AFTER you return home.

13) Pay your bills before you leave to avoid skipped or late payments that may be show up on your credit report.  Review your past three month’s bills to determine which bills are due on what date every month.  Then look at the current month to see which bills you have already paid.  You can then pay the bills that are due during your travel time BEFORE you leave.  It’s okay if they are early.  That is a much better alternative than having them be late.

14) Check your credit report by the end of February to assure that nothing unusual or erroneous is listed on there.  You can check your own reports at no cost here
NOTE: Checking your own credit does NOT count against your scores.  Learn more about Inquiries here.

 

 

 

 

 

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HOLIDAY TIPS TO HELP YOUR CREDIT

Identity theft prevention is important year round and even more so during the holidays when people are focused on family, festivities and fun.  Identity thieves know that more people are out shopping, that more money is being spent, and that distracted people may not be as diligent about protecting their finances at this time.  Here are some tips to help you protect your personal identity and your credit rating against fraud.

1) Keep your credit card in sight when checking out of a store or restaurant to avoid skimming.

Skimming has become a popular way for thieves to capture electronic information from credit and debit cards.  When you can’t see your card being processed, it could be swept through a capture machine before your actual purchase is transacted through the check-out register.  Taking your card up to the counter at a restaurant, and keeping an eye on your card at the register can help prevent the use of skimming.

2) Do not carry your Social Security card with you.  It holds the keys to your identity and you rarely need it.

Lock it up in a safe place at home.  No store is going to ask you for your social security number.  And if your purse or wallet gets lost, then ALL of your personal identification information could be in the hands of an identity thief.

3) Do not carry all of your credit cards with you, only the ones you are using that day.

If you know which stores you’re going to, only take the credit cards you’ll need at those stores.  Again, a lost wallet with 2-3 credit cards is easier to report and close accounts as opposed to a wallet full of every credit, retail store and fuel card you have.

NOTE: The Privacy Rights Clearinghouse offers Holiday Shopping Tips including how to carry your purse or wallet to prevent theft.

4) Keep credit card balances under 25% of their credit limit to avoid a credit score drop.

The second largest part of the FICO score is the amounts owed on your accounts.  Any revolving account that has a balance over 50% of the credit limit will have a detrimental affect on scores.  Balances close to the limit – maxed out – can cause scores to nosedive.

5) Resist that offer of a possible discount at the check out register that requires you to apply for a store credit card. 

Remember – applying does not mean approval. Whenever you apply for credit or a loan, it is a Hard Inquiry that stays on your report for two years and counts against your scores.

6) Don’t leave mail unattended in an unlocked mail box.

Many people send money or checks in holiday cards.  Identity thieves know that outgoing mail can be a treasure trove of personal information when people pay bills – account number, personal checks, signatures, etc.  They also know that incoming mail can be full of gifts and is often left sitting for hours in an unprotected mail box.

7) Check your credit reports after the holidays to look for unknown accounts or unusual balances. 

You can do this for no cost at www.annualcreditreport.com.  Look for accounts you don’t recall having, balances on accounts that you haven’t used, extra birth dates and Social Security numbers, and addresses in places you never lived.

You can get more identity theft prevention information here.

After the new year, you may want to treat yourself to a Credit Checkup.  For only $100 you get a complete analysis of your recent credit report with strategies to grow and protect your scores.  Contact us today for more information.

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Social Security Number on Driver License

By now, most people have probably heard that you should protect and safeguard your Social Security number (SSN) to prevent identity theft.   However, some people still have their SSN on their driver’s license (DL).

Yes, several years ago, some states decided to use the SSN as the license number.  Then, the Intelligence Reform and Terrorism Prevention Act of 2004 prohibited states from displaying our SSN on drivers’ licenses, state ID cards, or motor-vehicle registrations.  The law went into effect December 17, 2005, and applies to all licenses, registrations, and identification cards issued after that date.

If your license still lists your SSN as the ID number, you can request this be changed. You don’t need to wait until it expires to get one with a different number, though you will probably be charged a fee for the new license.      

You can go to your state’s motor vehicle department for details on how to change a DL license number.  This website has links to all the motor vehicle departments.

ATTENTION ARIZONANS:

Click on this website, go to #8 and follow the directions.  You can also call 1-877-692-9227 for information to change the number on your license. 

Click here for more tips to help prevent Identity Theft.  Protecting your identity is important to getting, and keeping, good credit.

 

 

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