Equifax and Credit Freeze
Updated: Aug 4
By now, most everyone is aware of the Equifax hack, but did you know it occurred all the way back in March? It was undiscovered for four months and then not disclosed to the public for another six weeks. This is also the second hack into Equifax since 2015. In the most recent incident, over 143 million credit records may have been stolen, including information such as social security numbers, driver’s licenses, credit card numbers, birth dates, and addresses. Even more alarming is that there were over 1,093 corporate and government hacks last year in general. That number was up 40% from 2015.
With this sensitive information obtained through breaches, criminals can, among other things, open new lines of credit in your name, commit utility fraud, clone your debit card to make withdrawals, take loans out in your name, or file fraudulent tax returns to steal refunds.
To protect against this happening and for positive publicity, Equifax is offering a free one-year subscription to their own monitoring software. Credit monitoring services notify individuals when there are signs of possible fraud. While this is both ironic and helpful of Equifax to provide their own monitoring service for free… However, it is not the most effective way to protect against crooks opening new accounts.
Freezing your credit with all three bureaus will prevent any new accounts from being opened in your name. Establishing a freeze is a preventative measure compared to a monitoring service, which is more after the fact in nature. A credit freeze seals your credit, not allowing any new accounts to be opened in your name. Freezing your credit will not affect any existing open lines of credit. During the freeze, you will be provided a specific pin number (do not forget the pin) that will allow only you to unfreeze your credit at any time in the future.
Another positive of freezing your credit is that all those mailings and solicitations for pre-approved credit card will stop arriving in the mail. If your credit is frozen, credit bureaus cannot sell your information to credit card companies or other lenders. Protecting yourself from criminals and helping the environment is an unlikely combination, but still a win-win in my book.
The downside of freezing your credit is if a legitimate credit report does needs to be run, it will not. As long as you unfreeze your credit before that report is run, there would not be any issues. After the new account is opened, you can freeze your credit again. For residents of Indiana, there is no fee or cost to freeze and unfreeze your credit. As long as you remember your pin, the process should no longer take 5 minutes per bureau.
If you are concerned about a possible breach (as everyone should be) and do not anticipate having your credit run in the near future, it may be a good time to put a freeze on it. Hacks of this nature do not seems to be decreasing in their sophistication or numbers in the near future. You can freeze your credit via the links or phone numbers below:
Phone – 1 (800) 685-1111
Experian – https://www.experian.com/freeze/center.html
Phone – 1 (877) 284-7942
Phone – 1 (888) 909-8872
For more general information on credit bureaus, their purpose and services, see my previous post titled “All About Credit Bureaus.”
As always feel free to reach out to me with any questions,
Evan Werckenthien, CFP©
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Source: Experian, Federal Reserve