published: September, 22nd 2017
As most of you probably know, Equifax (one of the three large credit reporting services) reported a data breach on September 8th. According to the company, roughly 143 million Americans had sensitive personal credit information stolen from the company between mid-May and mid-July. Compromised information included names, Social Security numbers, birth dates, addresses, as well as drivers license numbers and credit card numbers for a smaller group of individuals. Our own Chief Investment Officer had his information “hacked”. If you are curious as to whether or not your own data was included in the breach, you can visit www.equifaxsecurity2017.com.
While this is not the first time that one of these companies has been hacked, it is certainly amongst the largest. In light of this, we wanted to share a few strategies to help protect yourself from identity theft. No method of protection is perfect, however these are steps that you can take that will help make your credit more secure.
File a credit freeze with each of the three major bureaus. 49 States and the District of Columbia have laws which require the credit rating agencies to freeze access to your credit report at your direction – thus no business who relies on obtaining your credit history in order to issue credit can do so. In simple terms, if someone attempts to obtain credit in your name, and the credit issuer asks one of the three reporting services for your credit report, they will not receive anything. If you wish to unfreeze your account in the future, you typically will need to contact the credit agency to “thaw” your account for a specified period of time. If you do not frequently need to open new credit accounts, this can be the most effective method for safeguarding your credit, although it will require you to unfreeze your accounts and typically wait a few days for the thaw to be effective before obtaining credit in the future.
When you freeze your account, you will be asked to choose a numeric PIN for your account which you will need to unfreeze it in the future. You should keep this PIN in a safe place, as retrieving it can be difficult or impossible. Also, as with any password, easily remembered PIN numbers (like your birthday) should be avoided.
Typically, the cost to freeze your account is $10 per agency (so $30 if you freeze at all three reporting services). The services also generally charge $10 to thaw your account in the future. In some states, these fees are waived if you have been the victim of identity theft. You should check with the reporting services about the specifics for the state which you live in.
Note that the reporting services do not talk to each other about whose accounts are frozen, so in order to be fully effective, you will need to freeze your account at each of the three major credit agencies. Links to their websites are at the end of this post.
File an initial Fraud Alert. The Fair and Accurate Credit Transactions Act of 2003 enables consumers to file an initial Fraud alert with the credit monitoring agencies. Once this report has been filed, the credit agencies are required to verify your identity before distributing your credit report to a credit provider. In other words, if a business asks to see your credit report, the agency will call or write to you to verify you requested it before they distribute it. This service is free, but it only lasts for ~90 days until the Fraud alert expires. As a result, you would need to refile every 90 days for this method to be effective. Additionally, you need to make sure that each credit agency has your correct contact information on file. The good news is that the Act requires the agencies to notify each other of any fraud alerts, so you only need to file an initial Fraud Alert at one agency and it will be effective at all three.
Hire a credit monitoring service. These services do not prevent anyone from obtaining credit in your name, but they do alert you to various inquiries made about your credit status (address changes, billing inquiries, late payments, etc.). Most of these services also provide free access to a copy of your credit report on an annual or quarterly basis. Pricing varies depending on the provider. These services are useful for people who wish to monitor their credit and do not wish to deal with freezes or fraud alerts.
While there are other methods to prevent identity theft, these are among the most commonly used. If you rarely open new credit accounts, a freeze may be the safest and least troublesome option. However, if you frequently apply for new credit it may be easier to use one of the other two.
Here are the links to the freeze websites at the three major credit reporting services.
Rick Wedell is not affiliated with LPL Financial