Everyone is getting chopped left and right. Anthem lost 80 million records in 2015. The U.S. government was hacked and lost millions of personal records, up to and including fingerprint data. Now Equifax, a credit reporting agency, has been hacked . So how can you protect yourself from criminals opening accounts in your name?
Disclaimer: We are not tax or financial advisors, so make sure you do your own research and perhaps talk to a professional before taking any of the steps on this page. This article was written from our own experiences dealing with identity theft recently.
The Equifax hack was one of the biggest hacks of all time, stealing Social Security numbers, credit card information and more … but it wasn't the first one. The Anthem, U.S. government, and Experian hacks mentioned above were all similar, not to mention the smaller hacks of Target, eBay, Sony, Home Depot, and other hacks where they mainly got emails and passwords (instead of personal information). How many hacks have gone unreported, or worse, not even noticed yet?
Note: If you want to see if you were affected, you can check this page … but at this point you can assume your information was included in at least one of these security breaches anyway. ( Update : Equifax has since taken over the page we originally linked to, but you can still read the information about the breach on its website .
With this in mind, you can probably assume that criminals have access to enough personal information to open an account in your name, or that they will soon do so. After all, opening a credit card account doesn't really require anything other than a name and a social security number. Fortunately there is good news.
Dealing with stolen personal information
Most people don't know this, but you can actually freeze your credit report so no one can access it. This means credit card companies, banks, stores, apartments and anyone else who would normally need it can't pull your credit. This means that they can not open an account in your name.
Of course, this means you also can't open an account while your Schufa is frozen. Fortunately, the three credit reporting agencies allow you to temporarily (or permanently) release your credit report so you can apply for something. And if you want, you can freeze it again afterwards.
The only catch is that, depending on the state, freezing your accounts isn't always free unless you have proof that your identity has been stolen and a case report – it will cost you anything from free to $10 for each of the three credit bureaus. And you have to go through the process for each one individually.
It's important to remember that almost every time you try to open a new account of any kind – cell phone, car insurance, apartment, credit card, charge card or the like – your credit report will be accessed. Fortunately, it only takes a five-minute phone call to lift the freeze, or a simple online form, and you can specify when you want the freeze to go back into effect. Since most creditors only use one credit reporting agency, you don't have to unblock all three each time, just ask them which one they use and unblock it for them.
Should you freeze your credit reports?
Depends. If you have a reason why your credit report is pulled regularly, z. B. for your job, this may not work for you. If you're constantly opening accounts, this will likely be a bit of a problem for you – although our general financial advice would be to not open new loans every week.
If everyone's credit report was frozen by default, except when needed, there would be no such thing as identity theft. Think about it.
The difference between a security freeze and credit monitoring
The credit agencies really, really want you to pay for credit monitoring because it's a $10 or $20 monthly fee forever. They each offer their own "lockout" feature, but only for paying customers, and you really need to pay for all three if you want them to work very well. Of course, this is the solution they push in all their marketing, because it pays the bills.
However, credit monitoring only alerts you when someone opens an account in your name. What is the point? Sure, you can try to fight it, but when that happens, the damage is already done. And if you have to pay credit monitoring for all three agencies all the time, you'll just go broke.
A security freeze , on the other hand , prevents someone from opening an account without having access to all your information and your secret PIN number (a 10-digit code for two of the agencies and a 6-digit code for the third). .
If you have to pay for a security freeze, it is a one-time fee as opposed to a (forever) monthly fee for monitoring. "Thawing" your frozen credit report can be free or cost up to $10, depending on the state or agency. If you've been a victim of identity theft, you can get it all for free, but you'll need to figure out the process to officially file a report and get a case number.
If you read all the credit agencies help pages, they will recommend you use their other services, and make a big deal that freezing your account security will make it difficult to get a loan. But this is a bit of an exaggeration – you can lift a block very easily and temporarily if you decide to apply for something, you just need to do it in advance. How is this a big deal?
Bottom line: paying a maximum of $30 once to freeze your credit with all three bureaus is cheaper than paying $20 per month to monitor it for the rest of your life.
To block your credit accounts
For each of the three credit reporting agencies, there is a whole process you need to go through – first you need to go to each of their websites separately and enter all of your personal information, if you need to pay the $10 fee you need to enter your credit card number, and then use questions from your credit report to verify that you are who you say you are.
We strongly recommend that you have a copy of your credit report handy, as some of these questions can be tricky.
Alternatively, you can simply call each of them separately and complete the process over the phone, or you can even send the necessary forms and information to each of them. You will need things like a copy of all your information, a utility bill in your name, and some other information – you will need to check with each to see what they need.
NOTE: Be sure to make sure you are on the correct page when clicking through these links. Check the address bar to make sure HTTPS is displayed. Otherwise, go directly to each of their websites and find the security freeze option, usually hidden at the bottom of the page.
- Equifax: Go to https://redirect.viglink.com/?key=204a528a336ede4177fff0d84a044482&u=https%3A%2F%2Fwww.FREEZE.equifax.com and fill out the form or call them using the number on the page. They also have a help page with more information.
- Experian: go to https://redirect.viglink.com/?key=204a528a336ede4177fff0d84a044482&u=https%3A%2F%2Fwww.experian.com%2Ffreeze%2F and fill out the form. They also have a help page with more information on other options for freezing.
- Transunion: go to https://freeze.transunion.com and fill out the form. They also have a help page with more information (we recommend reading that first).
At some point during the process, you will either have the option to select a PIN number, or the system will automatically generate one for you. WRITE DOWN THIS NUMBER. Keep it in a safe place where you will never lose it. If you want to unfreeze your credit report in the future, you will need this PIN.
If you don't save your PIN number, you'll have to painstakingly call the credit bureau and request a new one, which can take a week to arrive at your home by mail.
In the meantime, keep an eye on your accounts
During this process, or any time such a hack happens, be sure to keep an eye on your credit card statements and credit report to see if anyone has opened accounts you don't know about. There have been so many hacks that chances are everyone has had their information stolen at one point – so if you haven't dived deep into your accounts yet, there's no better time than now.
Alternative: Enter a fraud alert
If you don't want to freeze your credit completely, you can also place a free fraud alert on your account. This works for 90 days, and then the process to continue it is a bit confusing unless you have a police report. Here are the links for Equifax , Experian and Transunion . When you submit a fraud alert to a credit bureau, it automatically applies to all three.
Personally, we have opted for credit blocking. But it's up to you.
One final note
When fraudsters steal your identity, they often file a fraudulent tax return in your name, depositing your tax return in their account rather than yours. This is a real problem – in 2012, scammers managed to collect $4 billion this way . Make sure you file your tax return as soon as possible so this doesn't happen to you.