Equifax Breach: Protect your identity through a credit freeze

As we have discussed in a recent article, identity theft can cause you to lose thousands of dollars, ruin your credit, and permanently affect your privacy. It is therefore critical to take the necessary steps to protect yourself against this growing threat. Last week’s Equifax breach is the most recent example of how unsafe our personal information has become. Based on our research, a credit freeze, also known as a security freeze, is the most powerful tool currently available to consumers. Although it is important to remember that no method is 100% effective at protecting ourselves from identity theft, freezing your credit should prevent others from being able to open a line of credit in your name. Let’s look at the advantages and disadvantages of freezing your credit.

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Pros

-This method prevents anyone from opening a new line of credit in your name without a secret PIN (which is provided to you by the credit reporting agencies when you freeze your credit). If you need to apply for a new credit card, you will need to temporarily lift your security freeze. If you lose your security PIN, you will need to request a new PIN from each credit reporting agency.

-If you are currently paying for identity-monitoring services freezing your credit will save you money as you will no longer need those services. Although they help you identify suspicious activity on your accounts, identity-monitoring services are mostly reactive in nature, alerting you once the damage has already been done. In addition, most, if not all, of the steps they take to protect your identity can be done by anyone for free.

-A credit freeze is more effective at protecting your identity than a fraud alert (see below for more information).

Cons

-Placing a freeze on your credit will require you to jump through extra hoops in order to open a new bank account, sign up for a new phone plan, or complete any other transaction that requires a credit check. You will need to temporarily “thaw” your credit before you can open a new account. This can either be done online or by calling Equifax, Experian, and Transunion. If you are not planning on applying for credit anytime soon, this will not affect you.

-A credit freeze will not protect your existing accounts so you will still need to remain vigilant by checking your transactions on a regular basis as well as using unique, hard-to-guess passwords.

This page tells you how much it costs to place a credit freeze in your state. The price to place, lift, and remove a credit freeze ranges from free to $12 per credit reporting agency.

Alternatives

Some people need to access their credit reports on a regular basis for various reasons. Credit freezes might not be an ideal solution for people in this situation. An alternative would be to place a fraud alert on their credit file. This method alerts businesses that your identity or credit was potentially tampered with and they are supposed to take extra steps to verify your identity. In addition, this has the advantage of being free and you only need to contact a single credit reporting agency to place a fraud alert. The problem with this method is that fraud alerts are sometimes ignored by creditors so this method offers less protection than a credit freeze. The other disadvantage of fraud alerts is that they have to be renewed every 90 days. You can obtain an extended fraud alert, which is good for 7 years, but only if you can provide police records proving that you have been a victim of identity theft.

The bottom line? If you want the best protection for your identity (and especially if you are concerned that your information might have been compromised in the recent Equifax breach) request a credit freeze. If, on the other hand, you need to access your credit on a regular basis (or you simply don’t want the hassle of thawing your credit anytime you want to open a new line of credit), request a fraud alert every 90 days. Be aware that each method has its advantages and drawbacks.

How to place a credit freeze online

You will need to access each of the following sites to place a credit freeze:

-Equifax: https://help.equifax.com/app/answers/detail/a_id/159/noIntercept/1

-Experian: https://www.experian.com/freeze/center.html

-Transunion: https://freeze.transunion.com/sf/securityFreeze/landingPage.jsp

Some final thoughts on protecting your identity and your credit

-Shred all documents that contain your personal information before throwing them away.

-Make sure to use different passwords for all of your accounts.

-Safeguard your personal information as much as possible.

-Never provide your personal data on a website that you do not know.

-Don’t give out your email address, phone number or zip code in stores unless you are required to do so.

-Make copies of all of your IDs, driver’s license, credit cards (this only takes a few minutes and can massively simplify your life if you were to lose your wallet) and limit the number of cards you carry on your person.

-If you are interested in opening a secured credit card to rebuild your credit, here is a list of recommended options by US News and World Report: https://creditcards.usnews.com/secured#best-secured-credit-cards-2017