The good news is, protecting yourself from these risks is simple. Follow the suggestions below to keep your business, credit, and personal activities as secure as possible.
1. Slow, even freeze, your credit.
The mass centralization of credit scores into just a few hands (there are only three credit rating bureaus) is dangerous. A negative blemish in one area of a person's credit sphere has the potential to cause a catastrophic loss of his creditworthiness to all businesses across the board.
The blemish could have been accidental (for example, a reporting error by one firm), or intentional (credit cards or whole identities stolen by thieves). It really doesn't matter how it occurs… the results are the same: You may be locked out of the credit markets for years. Even when you do regain some access to credit, your interest rates may remain sky high.
The average American does not realize how vulnerable his creditworthiness is… until it is too late. But there is a solution…
You can limit, even freeze, the issuance of new credit under your name.
Limiting the issuance of new credit just means establishing an extra layer of credit security, across the board. You can do this by issuing a "fraud alert" for your credit. (You don't have to suspect your credit has already been hacked to do this.) It's free and takes less than two minutes to do. You'll even get a free update of your credit report in the process.
Once the fraud alert is active, lenders are to double check with you whenever new credit is requested and verify you did the asking. Here's how to set this up…
Go to the website of any of the three credit-rating bureaus (Equifax, Transunion, or Experian)
- Search for "Fraud Alert"
- Submit the appropriate information
- Once the alert is active, it lasts for 90 days
- You can renew the alert every 90 days, indefinitely
- For active-duty military, the alert lasts one year, and can be renewed indefinitely
It's important to note that this measure does not stop the issuance of new credit… but it does make the process more accountable to you. It's a great, free way to establish an additional layer of credit security.
If a fraud alert doesn't give you enough peace of mind, you can take things a step further. You can place a freeze on any new credit issuance. This method is typically not free, but it does ensure that no lender will issue new credit in your name. It locks your credit profile and prevents any lender from accessing it.
The fee to freeze your credit profile is minimal and varies depending on the state in which you reside. It ranges from free to $10. The credit bureaus may charge to both "freeze" and "unfreeze" your profile. It takes a few business days for the changes to apply.
If you are in the market for a home or business loan, you may want to avoid doing this. But if you have no new credit needs, this technique brings great safety and peace of mind.
Search for "freeze" on any of the three credit bureaus' websites and follow their instructions.
2. Monitor your credit for free.
There is a free service called CreditKarma. This service monitors your credit every day, and sends you an e-mail if it detects any significant change. It also creates a CreditKarma score similar to the FICO credit score.
The website also helps you do debt analysis and suggests how to improve your scores. It even extrapolates what type of interest rates to expect for various purchases like houses and vehicles. And again, this is all free.
With this tool, there's no excuse for anyone not to have a firm grip on his credit. You can check out their website here (https://www.creditkarma.com).
A similar service is called LifeLock. This company charges for many of the same things that CreditKarma does not. But LifeLock also boasts a $1 million guarantee if someone hijacks your credit or identity "on their watch." LifeLock charges between $10 and $25 per month, depending on the suite of services you order. You can visit its website here (http://www.lifelock.com/).
3. Get a temporary credit card number.
You can get a temporary credit card number. Most major cards offer this service. Log onto your card's website and search for "temporary card number" or call them directly. They should be able to give you an alternative number to use for your next transaction.
Depending on the company and your own preferences, this number may be good for one transaction or for unlimited transactions up to a certain pre-determined date. You may also be able to set maximum credit amounts for this "virtual card."
One of my favorite ways to use a temporary card number is for limited, free trials. Let's say I get the first month free, but then must pay monthly after that. I can establish a temporary number that's good for one month only. Then, if I really want the service and trust the company, I can supply them with my regular payment details later.
Internet transaction king PayPal also offers this option. You can establish your own temporary PayPal numbers by looking under the "Profile" section of your account. Click the "secure cards" link and then select "generate new card." You can then specify rules for how you want to use your temporary "virtual" card.
4. Use your credit card to enhance your privacy.
I've discovered a trick that will allow you to stay in a hotel using a credit card and no one will know you're there…
Credit card companies give you the ability to request multiple cards for one account. Parents add their children onto their own account in this way. But you can also add a "stage name" or "professional name" to your account… and use this when booking a hotel room.
When providing ID to the desk clerk, use your passport (for added security – it doesn't show your home address). If questioned why the card differs from your picture ID, just explain it is your business or professional name. There shouldn't be an issue.
I first learned of this trick when I read the great privacy masterpiece, "How to be Invisible", by J.J. Luna. I recommend it to all those looking to "plug the holes" in their privacy firewalls. You can find out more about the book at Amazon here (http://www.amazon.com/How-Be-Invisible-Essential-Protecting/dp/0312319061).