Maybe you were distracted. There’s been a lot going on. With two major hurricanes hitting the U.S., threats of nuclear war from North Korea, the continuing dysfunction that is Washington, D.C., and the start of a new football season, you could have missed the details on what is possibly the biggest story ever related to your personal financial future. While that might sound like hype, it is most definitely not. This news could have an effect for the rest of your life.
I’m referring to the news out this week that Equifax, one of the three major credit-reporting agencies, was hacked. On September 7, the company reported that hackers had “exploited a vulnerability” and gained access to the personal information of 143 million Americans. It is one of the largest breaches ever and, considering the data they were after, maybe the most important. The hackers were able to get names, dates of birth, Social Security numbers, addresses, previous addresses, credit card numbers, and in some cases, driver’s license numbers. In other words, they were able to get everything they needed to completely steal your identity and credit rating.
This story has lots of different angles that would be worth exploring. For example, Equifax reported that the breach took place from mid-May until July. The company learned about the hack on July 29. Why did it take until September 7 to inform the public? Another angle would be to learn more about the reports that several directors of the company sold their stock holdings in the company before the announcement. After the announcement, the stock price cratered. Hmm, maybe the SEC can look into that one? There was also an outcry regarding the company’s “fix” for the problem. They offered a year of credit monitoring at no charge. That’s kind of like closing the proverbial barn door after the horse has already bolted. Or we could discuss how, at first, the company required that you sign away your rights to sue for damages if you took them up on their “free” credit-monitoring offer. Due to the public outcry, they have since changed their policy on that issue.
All of these are good topics, but for now, I think it’s more important to discuss what you should do to protect yourself. I’ve posted before about the importance of your credit score, What Is Your Most Valuable Asset? Your credit score can have an effect on everything from getting a job, to securing a mortgage for a home, to the interest rates you pay on your credit cards. You need to do everything you can to help prevent the thieves from using your data to enrich themselves at your expense.
Equifax set up a website so that you can check to see if you are among the millions of people who have had their information compromised. My advice? I wouldn’t waste my time with it. If 143 million people were affected, that’s close to half of the U.S. population. Chances are that you are one of them. My wife and I went through the process, and we were both on the list. Then you are given the opportunity to enroll in their credit-monitoring program. My advice is the same: I wouldn’t bother with it. It’s a confusing website that requires you to input your date of birth and Social Security number. It’s not very comforting to be asked to enter that information when it’s that same information that has been compromised. It has a scam feel to it. It is legitimate, but it just doesn’t feel right.
Now, about that credit-monitoring offer. Although it’s better than nothing, it’s not much better. Credit-monitoring services alert you when someone has gained access to your personal info. That’s too late. A better idea is to make sure they don’t get it in the first place.
That’s why I strongly recommend freezing your credit. I’ve also written about this in the past, “It’s Summertime! A Perfict Time for a (Credit) Freeze!” A freeze on your credit is the only way to completely protect yourself. Once you place a freeze on your credit with the three major credit agencies, a thief can have your name, date of birth, Social Security number, etc., and still not be able to open a credit account while impersonating you. In fact, with your credit frozen, even you won’t be able to! When you need to have your files accessed for a legitimate credit need, you simply “thaw” the account. Each state has different rules regarding a credit freeze, and costs vary from free to $30 ($10/agency). In Florida, it will cost you $30 to put the freeze in place. This website, http://clark.com/personal-finance-credit/credit-freeze-and-thaw-guide/, provides step-by-step details on how to get it done.
Other steps you should take to protect your credit and identity include monitoring your bank, credit card, and investment account statements for unusual activity, and checking your credit report at www.annualcreditreport.com. It’s free to check each of the three agencies once a year. I have a reminder to myself to check one every four months, so I am able to check it three times per year instead of just once.
You’ve worked hard to build your credit profile, and your personal identity is very valuable. Don’t let Equifax’s ineptitude do damage to either.