What Seniors Can Do to Protect Themselves From Identity Theft (Part 2)
Last week I told you about what you can do to monitor your credit report to keep an eye out for identity theft that may have occurred as a result of the recent Equifax data breach. This week we’ll talk about a more proactive approach, trying to stop theft before it occurs.
There is something called a security freeze, also known as a credit freeze. First let’s be clear about what thieves can and want to do with the information taken from Equifax. With your Social Security number, birth date and other identifying information, thieves can apply for loans, credit cards or other types of credit in your name. They receive the money or make purchases in your name and leave you with the unpaid debt. Financial institutions look to you to pay back the money and when you don’t place black marks on your credit and take legal action against you to collect on the debt.
If I place a security freeze on my credit file, when someone applies for credit in my name the request cannot move ahead without “unfreezing” it, using a personal identification number (PIN) which I have chosen. Thieves can’t proceed because the financial institutions can’t proceed with a credit check. Without that information to help them determine whether I am a good credit risk, they won’t issue the credit in my name. If I want to apply for a loan or a new credit card I must unlock my credit by providing the PIN which should take no more than 24 hours. This can be done by phone or online.
Because there are four consumer credit reporting bureaus and financial companies use different ones it is probably a good idea to place a freeze on your credit with each agency (Experian, Equifax, Transamerica and Innovis). The cost ranges from no charge to as much as $15 so for as much as $60 you can add a measure of protection against potential fraud.
There is also something called a fraud alert. This prevents financial institutions from extending credit in your name without getting your approval first. You must fill out a form and answer some questions. There is no charge to do this, however, it only lasts 90 days. You can renew but it seems to be a lot more effort to essentially renew 4 times a year to get continued coverage.
In my opinion a security freeze is a great option for seniors. Most seniors do not need to apply for new credit such as loans and credit cards, anyway, so the hassle of having to unfreeze credit is probably very limited anyway. For more information, go to each credit reporting agency’s website and you can find more information and how to sign up.