Part 1: Credit Freezes & One-Year Fraud Alerts
We live much of our financial lives on the internet. Some of our most sensitive information is housed in apps and websites that track our finances. Thus, cybersecurity should be a major concern for all of us especially since we have seen what happens when information isn’t safely guarded. We watched the CEO of LifeLock display his Social Security Number all over advertisements to prove how secure his product was only to have his identity stolen 13 times. We heard Equifax confess in 2017 that the personal information of 147 million people was compromised in a data breach. We remember reading news about data breaches at Yahoo, Marriott, eBay, Facebook, Home Depot, Target and more. Frankly, it’s overwhelming. Professional researchers say that there is a new victim of internet and identity fraud every two seconds.  So, what is a person to do?
We at Story Capital seek to educate our clients about cybersecurity and ensure that ours and our clients’ information is protected.
Are You at Risk?
The truth is that everyone is at risk. However, there are measures we can take to protect our information more closely. In this first part in a two-part series, we will discuss credit freezes and one-year fraud alerts. Both measures must be initiated personally, but they will make it much harder for someone to open a new account or take out a line of credit in your name without your authorization.
We mentioned the 2017 data breach at Equifax already. Did you know that Equifax settled with the Federal Trade Commission in September 2019 and promised to provide $425 million to those affected by the data breach? Whether the whole $425 million will be paid out remains to be seen, but an important development came out of the settlement which can benefit all of us regardless of whether our information was stolen. Credit freezes and one-year fraud alerts are now free to all consumers.
What is a credit freeze? A credit freeze restricts access to your credit report. It means that lenders will not be able to run your credit report to open a new account or take out a loan. This is true for both you and anyone that might try to open an account in your name fraudulently. If you freeze your credit and wish to open a new account or take a loan, you will have to unfreeze your credit (which is also free) in order to do so. This gives you more control and makes it much less likely that an account will be open in your name leaving you unaware.
Notably, a credit freeze does not affect your credit score. You will go on paying your existing credit card bills and loan payments which will impact your credit score as normal, but the act of freezing, unfreezing, and freezing will have no impact on your credit score.
How do you freeze your credit? You must contact all three nationwide credit bureaus: Equifax, Experian, and Transunion. They will need your name, address, date of birth, Social Security Number, and other personal information. See this website for more information: https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs
There are pros and cons to freezing your credit, so make sure you understand the process before you initiate a credit freeze. Remember that when you freeze your credit, you will have to unfreeze and re-freeze each time you take on a new line of credit such as a car loan or a home mortgage. If that does not feel like a hassle to you or you do not envision taking on more credit soon, then freezing your credit is a great option. In Story Capital’s view, it is a minor inconvenience now that could prevent a major inconvenience down the road. But remember that a credit freeze is just one potential step in protecting your information.
One-Year Fraud Alert
Fraud alerts will also make it harder for a person to open an account in your name. This comes in handy if your wallet, Social Security Card, or any other identifying information has been stolen or lost. It is also helpful if a data breach exposes your personal information. When you initiate a fraud alert, businesses are prompted to verify your identity before they issue any credit to you. This means that you would be contacted by a business if, in fact, someone is trying to fraudulently open an account in your name. When the one-year fraud alert expires, you can just sign up again for another year.
With a fraud alert, you need only contact one of the three credit bureaus. They are responsible for contacting the other two. You cannot stop Experian, Equifax, or Transunion from collecting your credit data, but you can work with them to ensure they do not send your information to the wrong people.
Story Capital is happy to remind our clients when we know their one-year fraud alert is expiring. If you are a client of Story Capital, just let us know when your fraud alert starts and someone from our team will remind you to sign up again in a year!
Both credit freezes and one-year fraud alerts will make it harder to open an account in your name without your authorization. This is your first line of defense in protecting your information. But how do you protect information that is tied to existing accounts and lines of credit? We will address that question next month in part two of our series.