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Just So You Know - Credit Freezes

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We recently brought you the story of Shea, one of our employees at TrustDALE, who had her credit cards stolen. Luckily, she had set up monitoring on all of her accounts, so she was alerted to suspicious activity right away. Credit Freezes are another very useful service to protect your credit.

A World of Hacking and Identity Theft

Today, hacking and identity theft are big business. When you hear about a security breach at a large company like Target or Equifax, the worry is that sensitive information about customers’ credit cards and identities has been stolen. Stolen information of that sort mostly ends up on the Dark Web, the seedy underbelly of the internet, where identities are hard to track, and criminal activity is common. Huge databases of identifying information are bought and sold on the Dark Web. Criminals purchase libraries of stolen identifying information to access other people’s credit cards and open up new cards in their names.

If your identity has been stolen—either hacked from a company with whom you willingly shared identifying information or because someone stole your wallet or other identifying documents—someone could use your identifying information to open up a credit card in your name. You might not even know about it until you get your first bill.

Defend Against Identity Theft

There are two primary ways to defend against identity theft. 

The first is to take steps to manage and protect your identifying information. To that, you should”

  • Don’t reuse passwords across different services
  • Read disclaimers about information sharing and opt out when you can
  • Don’t log in to secure websites on an insecure or public internet connection (e.g., at a coffee shop)
  • Shred mail with identifying information before throwing it out

Just two pieces of identifying information can help a criminal steal your identity. Beginning with only a little information, the identity thief breaks into increasingly secure accounts, collecting more identifying information as they go. Eventually, they have enough information to actually open new accounts, such as credit card accounts, with your information.

The second way to defend against identity theft is to limit the damage someone can do by hijacking your identity. One of the best ways to do that is the freeze your credit.

What is a Credit Freeze

Any time you want to apply for credit, whether it’s signing a lease, opening a credit card, or financing a large purchase, the lender checks your credit history and credit score. To find that information, the lender accesses a credit reporting agency. The three biggest credit reporting agencies are Equifax, Experian, and TransUnion. But you can instruct the big three credit reporting agencies not to share credit information for any new accounts. That is what we call a credit freeze. No new credit can be obtained because the credit histories associated with your identifying information are inaccessible.

If you do plan on applying for credit, for example, to finance a large purchase, you will have to unfreeze your credit before you apply. But that’s a small price to pay for the security that even with your information, a criminal can’t open a new account in your name.