GMR 53: Credit Freeze - A New Way to Keep Yoru Identity Safe

Episode 53
Your identity, especially your financial identity, is something you have to keep safe.  In this information age most of your personal information is stored digitally, which means there’s an increasing risk that the wrong people will gain access to it.  What you do to protect your information can either make you vulnerable or safe.  In this episode we share ways you can keep your identity safe, including a new law that makes it much easier for you to ensure identity theft doesn’t happen to you.

SHOW NOTES

Credit Reporting

Credit Score ranges between 300-850

Credit score rankings:

  • 350-620 - Bad

  • 620-660 - Fair

  • 660-720 - Good

  • 720-850 - Excellent
     

Love hate relationship with the credit score.

  1. I love that someone was smart enough to build a business tracking this data and making it easier for businesses to lend money to trustworthy people, so that it’s easier to buy a house, this system has made it very easy for large companies to make millions of decisions everyday about borrowing and lending. That’s kind of neat.

  2. I hate that they take all of our information without our permission, they don’t make it easy for us to access and manage the information flow. They don’t protect the information as well as is needed and can put us at risk for identity theft.

  3. I also hate that the system encourages debt and makes “borrowing” easy...I think borrowing is something that very rarely makes sense in someone’s life. I think you need “surety” if you’re going to borrow. I think most people don’t realize the risk of debt. I think too many companies.

You can’t stop them from tracking all your data and putting together a score on you, but you can implement some strategies to keep your credit report safe from Identity Theft

Consider these identity theft statistics:

  • 2017, 6.64 percent of consumers became victims of identity fraud, or about 1 in 15 people.

  • That equals 16.7 million victims last year, an increase of 1 million from 2016.

  • Over 1 million children in the U.S. were victims of identity theft in 2017, costing families $540 million in out-of-pocket expenses.

  • There’s a new victim of identity theft every 2 seconds.

  • It takes most victims of identity theft 3 months to find out what’s happening, but 16 percent don’t find out for 3 years.

In other words, if your chances of winning the lottery were 1 in 15, like the odds of being an ID theft victim, we’d all have family, friends, and colleagues who are millionaires.

How can you protect yourself?

  • Use two-factor authentication: Banks and brokers commonly ask you to verify your identity by receiving a text message or email when you use a new device to sign in. Now, many online merchants offer the same, but consumers generally must opt in.

  • Encrypt and password protect: Malware doesn't infect only your computer. Now that an increasing amount of commerce is conducted via phone and other mobile devices, new viruses aim at them. Treat your mobile devices with the same care that you use to guard your desktop or laptop. Secure them with passwords, security software and encrypt any stored data.

  • Set up alerts:  An increasing number of companies allow consumers to put alerts on their accounts when transactions exceed a certain dollar amount, which could allow you to spot fraud before it got out of control.

  • Freeze or lock: If you're not planning to apply for new credit anytime soon, consider freezing your credit reports with the three major bureaus. This will halt any new credit being opened in your name. The downside is that freezing credit reports can cost up to about $10 at each credit bureau, and if you want to apply for a loan, you would have to lift the freeze first.

What is a credit freeze?

A freeze makes your credit reports inaccessible to most people, with some exceptions:

  • You can access your own records, including getting your free annual credit report, while your credit reports are frozen.

  • Pre existing creditors and debt collectors still have access.

  • A freeze has no effect on your credit score.

What are the pros of freezing my credit?

  • Peace of mind and protection against identity theft.

  • No one will be able to open credit accounts in your name, which can save you the hassle and cost that come with having your identity stolen.

  • It is the strongest form of protection for the sensitive data in your credit reports, and it is free.

What are the cons of freezing my credit?

  • Freezing your credit can be inconvenient. You need to contact all three bureaus.

  • You also have to establish accounts with Equifax and TransUnion when you freeze or thaw online, while PINs are required when you unfreeze by phone or postal mail.

  • You are required to keep track of your PIN to freeze and unfreeze your files regardless of method.

  • A freeze can give you a false sense of security — you may still be susceptible to credit fraud or other fraud involving your Social Security number.

  • A credit freeze won’t affect your current accounts, but if a thief steals the information on an existing account, your credit may be used without your permission. It is still important to check statements carefully.

How to freeze your credit

Once a credit freeze, also known as a security freeze, is in place, it secures your credit file so nobody can access it unless you give direct authorization to the credit bureaus, usually through a password-protected credit bureau website or PIN.

 

 

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