How a Credit Freeze Can Prevent Identity Theft

credit freeze

It seems like every time you turn on the news or log on to your Facebook account these days, there is chatter about yet another massive data breach. In today’s increasingly digitized world, our personal information has never been more at risk of becoming compromised. Identity theft is a very real threat to your valuable identifiable data, your credit score and your overall financial security. While it can seem like identity theft is out of your control, you actually do have the power to defend yourself. One of the best ways to do this is with a credit freeze.

What Is a Credit Freeze?

A credit freeze puts an immediate lock down on your credit information and prevents potential cyber thieves from stealing any of your identifying information in order to open an account (anywhere) and start racking up debt in your name. A freeze will disallow anyone who is not actually you from gaining access to your credit file. Since creditors like banks and credit card companies need to see your credit report before they will open a new line of credit for you, they will be unable to do so unless you specifically lift the credit freeze.

When you initiate a credit freeze, the only people who will have unlimited access to your credit report are you and any current creditors and debt collectors you may have. Employers and some government agencies will have limited access to your credit report.


IMPORTANT NOTE: A credit freeze does not impact your credit score and is totally free.


When Is a Credit Freeze Called For?

A lot of people freeze their credit after they have experienced an information breach or have otherwise had all or part of their personal data stolen. The challenge most commonly encountered when freezing your credit report after an incident is the race against time. Who will “get to” your credit report (and all of the personal information contained therein) first – you, or the criminal?

Because of the aforementioned “race against time,” preventative measures, like freezing your credit before an incident occurs, are much more likely to be effective. With a credit freeze, even if your Social Security number somehow becomes compromised, the rest of your data and accounts will be protected. It is also a great idea to freeze your child’s credit report now in order to protect their future.

How Do I Freeze My Credit?

While freezing your credit is free, it does require you to jump through a few hoops. You will need to contact all three major credit bureaus and freeze your account individually. While this is time consuming, it will be worth it when your credit report and score remain safe if (when) another cyber attack materializes.

Each credit bureau will present a slightly different process to freeze your credit, but you will definitely need to provide them with: your Social Security number, birth date, last two addresses, a clear copy of a government-issued ID card, and a copy of a bill or bank statement with proof of your current address. You can request a freeze via phone, e-mail, or through the good old-fashioned Postal Service.

Once you apply for a credit freeze, the credit bureaus will give you a PIN with which to manage your credit freeze. You will need to keep this number in a safe place because you will also need it in order to unfreeze your information when the time comes to open a new line of credit. Your credit freeze will be activated one business day after you make the request via phone or online, with mail requests taking three business days.

What Happens When I Need to “Unfreeze” My Credit?

To unfreeze your credit, you will need to provide the same credentials with which you initiated the freeze, to the credit bureaus. Per federal law, the freeze should be lifted within an hour if you make the request via phone or email. Mail requests to unfreeze your credit will take three business days.

You can also request to have the freeze lifted temporarily, so a potential employer or landlord can do a quick check before your credit goes back into freeze mode.


PRO TIP: Ask which credit bureau they will be contacting and only unfreeze your data at that bureau.


Is There a Down Side to Freezing My Credit?

There are some cons to credit freezes. The process of requesting and managing a credit freeze with three different credit bureaus can be a lot to juggle. You will also have to go through the extra step of unfreezing your information anytime you apply for a new line of credit. Additionally, putting a credit freeze into effect now won’t protect any of your existing accounts from fraudulent activity.

Regardless of any negatives, in today’s increasingly digital world, protecting yourself from a cyber attack with a frozen credit report is a fantastic—and free—way to keep your personal information private.

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What the Equifax Breach Means for Consumers and How to Take Action

The Federal Trade Commission recently reached a settlement with Equifax over a data breach that has impacted around 147 million Americans. The popular credit monitoring agency admitted to a leak that included social security numbers, addresses, birth dates, driver’s license numbers, and credit card information. Nearly half of all adults in the United States have been affected and are therefore eligible to file a claim in the settlement to receive compensation from Equifax.

What does the Equifax breach mean for you?

The first thing you should do is check to see if your information has been impacted by this breach. On the official Equifax Data Breach Settlement website, you can enter your last name and the last six digits of your social security number to see if your data was part of the breach. Make sure you are using the official, government approved website before entering any personal information. If you determine that your data was indeed breached, you have a few things to consider. The settlement includes three options for compensation:

– A one-time payment of up to $125

– 10 years of free credit monitoring services

– A one-time payment of up to $20,000 if you can prove you spent time or money on identity theft services due to the data breach

In order to receive any of the above compensations, you must fill out the application on the website by January 22, 2020. You can also choose to opt out of the settlement. In order to officially opt out, you must formally exclude yourself by November 19 of this year.

It is important to consider how this breach could impact you before you decide on a settlement option. Despite the low payout amount, consumers should not take this data breach lightly. Once your private, identifying information has been leaked, it can spread indefinitely. Data hackers can sell and re-sell your information forever. If your information is actively being used, $125 is not even close to enough money to cover the cost it will take to repair and protect your finances. Equifax has allotted $425 million for financial compensation—meaning actual, per person payments will likely be much less than the $125 listed. Early applicants will have a better chance of getting the full amount.

Because of this, financial advisors are suggesting that consumers opt for the free credit monitoring or exclude themselves from the settlement all together. Credit monitoring and identity theft services could serve you much better than $125 in the unfortunate event that your information is being sold on the dark web. Opting out of the settlement would allow you to sue Equifax as an individual, giving you more legal power to recuperate your financial losses in the event of a significant identity theft situation. Additionally, if your information has been seriously compromised and you have experienced significant financial loss due to identity theft, it is important to speak with a NJ lawyer who has experience with identity theft.

The one thing you can and should do right away in response to the Equifax data breach is to start practicing better cyber hygiene. Hackers look for more than just social security numbers and credit card information. Oversharing other personal information can be just as costly online. To protect yourself from identity theft online, these three steps can help keep your information secure:

1. Social Media: Make sure all of your social media accounts (Facebook, Instagram, Twitter, LinkedIn, etc.) are private so the only people who can see your information are those you choose to connect with. Even if your account is private, carefully consider what you share. Hackers can use your hometown, your birthday, your employment history, and other pieces of information commonly shared on social media platforms to acquire your private data.

2. Data Check: Google your name and city and see what pops up. If your full name, address, e-mail, or other personal information appears, this should make you wary about sharing additional information online. The more free information a hacker has access to, the easier it is for them to assume your identity to gather critical data about you, such as your social security or credit card number(s.)

3. Passwords: Get into the habit of changing all of your online passwords regularly and never use the same password twice. If a hacker is able to breach one account, they will try the same password over and over again. This can be disastrous for those who use the same password repeatedly.

With the global transition to online platforms, the way we protect our personal information and financial data has to change. Unfortunately, events like the Equifax data breach are becoming more and more common. Learning how to protect yourself and your personal information from hackers could save you a lot of time, money, and emotional distress. Minimizing the amount of personal information available online can be your first defense against cyber hackers.