Chapter 6 – Unneeded Credit Can Kill Your Identity

Crime No. 4 – Asking for unneeded credit

Stop asking for new Credit when you can pay with cash or use existing credit lines.

First, credit is good. Credit is one creature that the only way to get it is to not really need it. And one way to demonstrate you do not need credit is to have several open accounts (credit cards, revolving accounts, gas card, etc.) that you are not using. And, ironically, the more active accounts you have with low balances or no balances, the better your odds at getting more credit like a house or car loan. And as you have more low balance credit accounts, your credit score can go up. The better your credit score, the more money an Identity Thief can steal in your name.

Daily, many people fall prey to “90 days same as cash”, “easy financing”, “No interest until year _____”. They assume since it is so easy, it is also good. However, they could easily use cash or existing credit to pay for the purchases. These purchases often are convenience or luxury: TVs & stereos; lawn, patio & pool items; home improvement & decorating; furniture; appliances; or automobile service. This credit is usually sold through the store selling the items or services. One stop shopping – buy here, pay here.

The predicament with this kind of credit is that you could be giving your valuable and most personal information to:
(1) A clerk taking the application,
(2) A sales manager who approves the application,
(3) A data entry clerk at the financing company,
(4) An account manager at the finance company,
(5) The finance company’s accounts receivable department.

And this is at a minimum! Are there sales or office people who can casually walk up to the desk where your application is laying as it waits on approval? What about the cleaning crew in the store you are getting your credit from? How secure is your information once the staff leaves? Is it on the desk? Locked in an easy to open desk drawer?

Ok, even if the store is secure, what about the financing company? Depending on the size of the financing company, there can be dozens of other people that will have access to your full account information. One $500 easy financing loan could expose your information to numerous people. This untold number people could include just one interested in placing their own personal financial needs well before your financial security.

Consider this: does the finance company hire minimum wage people or are they compensated adequately to encourage them to not dip their hands into your pool of financial resources? For that matter, does the store you purchased the items from pay its’ staff well enough to prevent one of them from faxing your application to a friends house where your data can be used, abused or even sold?

Every one of these people represent a crack in your shield of protection. Consider this carefully – in order to get 180 days free financing for a $500 TV, How many people are you going to give access to your employment history, social security number, home ownership information, employer name & address, birthday, annual salary, bank account(s) and likely 1, 2 or 3 other credit accounts “for verification of solid history”? By asking for this type of credit, you have laid out your life history and for what and to whom? Not a one of them is going to provide you with any information about themselves. Have they received citizen of the year awards or are they behind in their own personal credit card payments or would like to take a nice – expensive – vacation that is just not in their budget. You have to tell them everything, yet they tell you nothing.

Go ahead and ask for extravagant credit if you want. Just consider the risks and the rewards for each and every account you open. Most places that offer easy credit financing also take credit cards (or ATM cards) or checks from the checkbook you should not be carrying. Need new furniture, tires and brakes for the car, or a whole new car? Check with your bank, a credit union or even your investment broker first. The interest rates may be very attractive, and depending on how it is financed – could be a tax deduction. It will certainly be more protective of your identity when compared to Easy Financing and 90 days same as cash.

A separate issue with this kind of credit is that it is normally at higher interest rates than many credit cards. Higher than credit cards?? Yes, read the fine print carefully. It is not uncommon for these accounts to be 22, 25 even 30% annual interest rate. And they may have huge penalties for being late or a balloon payment that has to be paid off at some future date. Of course, these large payments can be re-financed – at an even higher rate.

In the center of this book, is a Financial Inventory Form. This form is very useful for several reasons. One reason for this form is to allow you to right now take stock (listing) of every credit card or account you have. This will assist you if you are hit with Identity Theft as you can quickly contact every company you do business with to put flags and stops on your accounts. It will also show you accounts you already have that you could use to make your purchases without opening new ones.

The form will also allow you to rapidly find any New or Extra accounts that are on your credit report. The form is in the middle of the book. Please find it now, remove it and start filling it out. By the way, it ultimately will become a very dangerous item, so it must be protected as detailed in Document Security and Destruction on starting page 35.

Before opening any credit account: Look carefully before you sign away your Identity.