As much as I tried not to, I became increasingly concerned about Equifax data breach the more I learned about it. The Atlanta-based company recently announced that its computer system was hacked, exposing as many as 143 million people to identity fraud. If that weren’t bad enough, the company waited at least six weeks to tell anybody.
Based on money expert Clark Howard’s recommendation, I decided it was time for me to open an account at CreditKarma.com, which offers free credit monitoring, along with other services aimed at protecting your data and making you a more informed user of credit. Clark says to do this before freezing your credit to make sure you’re alerted if anyone tries to fraudulently open an account in your name.
Unlike a lot of similar companies, Credit Karma lets you check your credit free of charge as many times a year as you like.
And so I signed up, putting in my email address and choosing a password for the website. I was immediately given me two choices, either to “Inform me about updates to my credit report and important notifications related to my credit profile” or “Email me about special promotions and offers” or both. I chose only the former.
I signed up for Credit Karma because of the Equifax data breach
Once you click past that screen, you’ll arrive at the page where you enter your personal information. Don’t worry: Credit Karma uses 128-bit encryption. It’s strange to be worried about data protection while signing up for data protection, but, hey, these are interesting times.
Once that’s done, you’ll click “Next” and go on to the registration page. Here it will ask you a series of questions to prove your identity. One of those questions I got was: “Your credit file indicates you may have a mortgage loan… who is the credit provider for this account?” Since I do have a mortgage, I took this as a good sign that the system was working accurately.
A couple of other questions followed, one about my banking institution and a monthly payment amount that I pay to a creditor. Once I filled that out, I pressed the green button that says “Get my score.”
Here comes the fun part: In a matter of seconds, it refreshed to a page that showed me my credit scores as reported by TransUnion and Equifax. You can select either credit agency to dig deeper into the numbers.
Both reports are designed to give users an overall picture of their credit health, including credit card balances, personal loans, the mortgage and the like. For me, TranUnion computed that my score card was a 761; Equifax bumped me a point higher. While 700 is a good credit score, it’s pretty average for today’s consumers. At least it wasn’t in the 600s, which would indicate some problems. And anybody who gets above an 780 score is generally considered an elite borrower.
As Clark has said before, it’s not good to use more than 30% of your available credit. Top-notch credit scores generally have usage below 10%. I came in at 11%, according to Credit Karma, so while I’ve got some ‘splaining to do, I’m in pretty good shape.
TransUnion also let me know whether I’ve made my payments on time (99% for me, but who’s perfect?) as well as how many inquiries have been made recently about my credit (one) and the median age of my credit lines.
One thing you’ll want to pay especially close attention to are “Derogatory Marks,” negative dings which could be anything from tax liens to civil judgments against you.
From this page I decided to drill down into the numbers a bit further when it came to my credit card use. How much was I swiping and which cards were I using the most?
TransUnion showed me that I was in a “healthy range,” but also advised that if I bring my balance down just a bit ($300) that I’d get a healthy credit boost.
Next, I wanted to know what hard inquiries, if any, I had that may be a drag on my credit score. By clicking “hard inquiries” in the navigation bar in the middle of the page, I was able to see that I had just one inquiry in the last two years, which is the amount of time they stay on your record.
Next I toggled to Equifax to see if their information was similar. Interestingly, it showed a big increase in the number of hard inquiries — six to one — compared with TransUnion. “How could this happen?” I thought. “Why would there be a discrepancy?”
When I clicked to see the details, lo and behold, each and every one of the hard inquiries was correct. I had been in the market for a new car last year and went to several dealerships and lending institutions to check their auto loan rates. It was all accurately reflected. No gripes here, Equifax.
I also was concerned about the number of accounts I had open. To be honest, I couldn’t exactly remember. Did I close this credit card? Was that one still open? So I clicked on the “Total Accounts” button and got an itemized list of not only my open credit accounts, but the ones I’ve closed as well.
I began to realize that — just like my parents always said — my credit history followed me around. Some accounts that I had forgotten about or didn’t use for a number of years showed up on the list as still active.
While this is all some great information, the biggest peace of mind is being able to verify the accounts it shows you having. In other words, don’t just take Equifax’s word for it when it shows you want accounts you have, always try to authenticate their information. Credit Karma even says on the page “Check the accounts listed to make sure they’re accurate.” Again, if you sign up for their alerts, Credit Karma will let you know if someone else tries to open an account in your name.
Satisfied that my financial history is in decent health and that I don’t have any credit monsters in the closet that could jump out to bite me down the line, I logged off and decided to head to lunch. Should I pay cash or charge it? I now had to think very carefully about that.