My Way Credit

Identity Theft Concerns

There are a number of reasons you might have a concern about the illicit use of your identity. A lost wallet, unexplained accounts on your credit report, mysterious transactions on a credit card; these can all give rise to very reasonable worries about fraudulent activity. These events may be of little consequence, or they may be quite serious. Either way, there are a variety of credit repair solutions that you should implement immediately. Credit repair solutions include investigative, preventative, and curative, and all three should be employed.

Investigate the Issue

If you discover activity on your credit report that is not yours it may be the result of a file merger error. This means that someone else’s credit data has been merged with yours. As awful as this may sound, it is pretty innocent and has an easy credit repair cure. So, before you jump to conclusions about identity theft take a few minutes to investigate. Get copies of all three credit reports, circle the unknown accounts, call the creditors, and ask them if they have an account in your name. If they tell you that they have no record of the suspect account you are a victim of a file merger error. This is easily cured with a bit of credit repair. Just write to the credit bureaus telling them that someone else’s credit is showing on your report, and ask them to correct the error. Be sure to provide your identification. File merger errors are surprisingly common and the credit bureaus will most likely resolve the problem for you right away.

Cure the Problem

If on the other hand, the creditor acknowledges that the questionable account is yours, you may have been a victim of identity theft and should implement a more serious credit repair cure right away. The Fair Credit Reporting Act provides a very powerful solution for identity theft victims. You need to go the police station with a copy of your credit report and ask them to provide you with an Identity Theft Report. You will need to send this to the credit bureaus along with your identification and a signed statement affirming that the accounts in question have nothing to do with any transaction of yours. The credit bureaus will block the suspect accounts with a few days and initiate an investigation.

Prevention of Identity Theft

If you have been a victim of identity theft, or are just concerned about preventing the problem from occurring there are two easy and effective credit repair solutions. The credit bureaus offer a simple warning system called a Fraud Alert. A Fraud Alert is a statement inserted into your credit report requesting that prospective lenders contact you before extending credit. All you need to do is ask the credit bureaus to include this statement on your report, provide them with a contact phone number, and you are all set. There is no charge and the alert will remain on your credit report for 90 days. After 90 days you may extend it if wish. You may also cancel it at any time if you feel that the threat has passed. Fraud Alerts, however, are not foolproof, and some lenders may ignore the alert and extend credit regardless. An excellent ancillary credit repair solution you should implement simultaneously with your Fraud Alert is credit monitoring. Credit monitoring is a service offered by the credit bureaus which will alert you to any activity on your credit including inquiries. You can expect to pay less than $20 per month for this service. If someone attempts to use your identity you will be contact in time to avert the issue.

Consult a Professional

If you have concerns about fraudulent use of your identity you should consult a credit repair professional. Most credit repair services offer a free consultation which you should take advantage of. There may be considerations other than have been mentioned in this article, and every situation is unique. As important as your credit is your should always make informed choices.

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I first heard rumblings about changes to foreign transaction fees last week: A reader wrote in a complaint about her credit card charging a 3% foreign conversion fee on an international airline ticket purchase made in online in US dollars. Here's an excerpt from her email:

It seemed like a fluke - but these days you can't put anything past the credit card companies. Then I got a letter from Bank of America confirming my suspicions. You can click on the image to read the scanned version.  Here's the text of the notification:

Blerg. Foreign transaction fees were already one of the more heinous credit card charges - the fee amount is usually buried in with the converted currency amount and very difficult for a traveling cardholder to identify.

Now it sounds like you'll have to worry about picking out these fees from purchases made within the United States too.  In particular, watch out for booking flights or hotels with international companies or shopping online with merchants that aren't based in the US. 

It's difficult to tell from this disclosure exactly what will count as a foreign transaction. If you spot a foreign transaction fee on your credit card statement for a purchase made from within the US, please share your report with us by email or in the comments section below.  We'd love to compile a list of retailers and companies are being included in this new definition.

Emily Peters – Credit.com's personal finance expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

If you looked into credit counseling earlier this year but found the monthly payments too high, you may want to try again. As part of an initiative spearheaded by the National Foundation for Credit Counseling (NFCC) to help more people pay their debts through a credit counseling agency and avoid bankruptcy, the top ten credit card issuers have agreed to offer new reduced payment programs.

How much better are these new repayment plans? In some cases, a lot better. Take someone who has $24,000 in credit card debt (the average amount that people owe when they contact an NFCC member agency). Under the traditional Debt Management Plan (DMP) offered by counseling agencies, the payment could be $750 a month. If this individual can afford that, terrific. But if the consumer cannot afford it, (s)he would be left with no other options but to consider debt settlement or bankruptcy. Under the new DMPs, however, that same consumer could have a monthly payment as low as $420 – a savings of $300 per month.

These new and improved DMPs are called “Standard” DMPs and “Hardship” DMPs (together dubbed the “Call to Action” DMPs). Here’s what they offer:

1.    Lower monthly payments. Monthly payments can be as low as 1.75 percent or 2 percent of the outstanding balance. Previously, monthly payments totaling at least 3 percent of the balance were required. All plans must be structured so the consumer is out of debt in five years.
2.    Monthly savings accounts. Though not a requirement, consumers will be strongly encouraged to set aside $25 a month in a savings account for emergencies.
3.    Budgeting cushion. In the past, many creditors wanted to see every possible penny in the debtor’s budget go toward repaying what they owe. It’s not hard to see how that would be recipe for failure. Now consumers will be allowed a “cushion” of $200 in their monthly budget for the unexpected and unplanned.

With these changes, more people should be able to stick with a plan to get out of debt. It’s not easy these days. According to Moody's Credit Card Index, credit card charge-offs (bad debt) climbed in March 2009 to a record high 9.30 percent, and are expected to peak in the second quarter of 2010 at about 12 percent. That’s an astounding number of unpaid bills, and it will only make the credit crunch worse as banks try to make up for rising losses by charging higher rates and fees to everyone else.

Of the 3.2 million consumers who contacted NFCC member agencies for help in 2008, some 450,000 who couldn’t qualify for help probably would have qualified under these new guidelines.

So if you’ve called a credit counseling agency this year and found out you just couldn’t afford to enroll, it may be worth a second look. And if you are on the fence, wondering what to do about those mounting credit card bills, take another look at credit counseling. It may offer the relief you’re looking for.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com. Gerri contributes budgeting, debt recovery, and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis