Calming Facts About Identity Theft
If someone successfully applies for a loan or a credit card using your identity, there will be a big mess to clear up. I don’t want to downplay the hassle, there. I would be extremely annoyed if that happened to me.
However, what we hear on the news and especially in commercials for services like LifeLock (lots of lawsuits) and FreeCreditReport.com (misleading at best) is inundating us with fear that it’s almost a given that it will happen to us. The truth is, financial identity theft becomes less likely to happen to any one person with each passing year. From Wikipedia:
Identity theft complaints as a percentage of all fraud complaints decreased from 2004-2006. The Federal Trade Commission reported that fraud complaints in general were growing faster than ID theft complaints. The findings were similar in two other FTC studies done in 2003 and 2005. In 2003, 4.6 percent of the US population said they were a victim of ID theft. In 2005, that number had dropped to 3.7 percent of the population.
When listening to people tout statistics, keep in mind also that “identity theft” is a broad category that includes financial identity theft. They’re both awful, and I hope it never happens to you, but you don’t have to feel like forking over $10 a month for identity theft protection is necessary. You certainly don’t want to publish any sensitive information in the newspaper like Jeremy Clarkson did, but you should be fine with shredding anything that has, say, a promotion code, or your name already printed on it.
Here’s an excellent resource from the FTC.
And incidentally, why do the FreeCreditReport.com commercials hinge on the fact that if my credit is compromised, I won’t be able to get a good job? What does my credit report have to do with my résumé?
Article comments
@Flexo and Jenny: Jenny’s got it right. This also applies to Security/Secret/Top Secret clearances. If you have a bankruptcy, foreclosure, or repossession on your credit report from the last 7 years you can kiss getting a clearance goodbye. I’ve also heard that if you *have* a clearance and run into financial straits, you can lose your clearance (and thus your job).
For other companies, it is seen as a risk that you can’t handle your finances, it could happen again, and if it does happen again you are likely to accept bribes or steal from the company to take care of your financial problems.
I was recently unemployed (but not anymore) and two different companies wanted my SS to run a credit check. I work in software – and not in anything related to finance – so there’s no obvious business reason for the credit check.
Further to the moral scorecard thing, many employers view a credit score as the likelihood that you, as the candidate, will or won’t steal from the company. For example, if you’re applying for a job that handles a lot of cash on a daily basis or has access to confidential business info, and you’re in financial straits, you have a motive for embezzling or participating in industrial espionage, among other things. For many companies, it’s a way to protect against some of the liabilities that hiring employees represents. Indeed, many companies view pulling credit reports as part of their regular background checking routine.
And too, using credit reports in hiring decisions is not a universal practice (at least that I know of, here in the US). Although it’s standard practice for companies to request permission to pull your credit report when you apply for a job, not all companies actually do so while they consider hiring you. I think it really depends on the company culture and the industry they’re in. Yet another reason to do your research when you consider applying to any particular company.
This is in response to the current “Mary Worth” storyline, isn’t it?
Some jobs in finance require a credit check. Apparently, the employer believes that a lack of personal financial responsibility might be a sign that the candidate won’t handle the company’s money well if they are in a position to handle it at all. I’m not so sure that there is a connection, but that’s the reasoning.
I do agree that the media tends to blow the topic of “identity theft” out of proportion. Also, there’s more risk in old-fashioned money handling than there is with online transactions.
Ridiculous as it is, there are some professions that consider credit reports as part of a “moral scorecard” that determines whether to hire (or keep current employees). I know someone who was dismissed from the police force because his credit took a hit.