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Why Freezing Your Credit Doesn’t Freeze Identity Theft

By Jayme Cook on April 13th, 2018

The Equifax data breach of 2017 has left many Americans feeling like victims with no control over their own sensitive information, reeling and scrambling to protect themselves. As the dust settles on one of the most significant leaks of confidential information of this age, those affected try to sift through the debris and determine what action will really help them protect their funds and identities. Immediately following the announcement of the Equifax disaster, the phrase “credit freeze” was uttered on mainstream news outlets by proclaimed financial experts offering advice. A credit freeze was presented as a solution to the problem of compromised sensitive information; however, it is not the single, definitive answer to protecting one’s identity after the breach. For those impacted by the data leak, here are the proper steps to take, in addition to freezing your credit, to safeguard your money and identity and to avoid becoming a victim for the second time.

The Truth About a Credit Freeze

First of all, requesting a credit freeze is a good move; it just isn’t the only move required of you to ensure your safety. It’s usually free to do, so it’s a reasonable place to begin, but freezing your credit only means that no new accounts can be opened in your name by you or by anyone else. This ensures that no new credit cards or car loans will spring up on your credit file, but the opening of new accounts is one of the least likely forms of identity theft to occur, with only four percent of U.S. victims reporting such activity. Essentially, a credit freeze can help a little, but it is far from a security solution.

Most Common Consequences of Compromised Data

If the opening of new accounts is one of the least likely effects of compromised data, what exactly is it that you should be worried about? The most common threat is the fraudulent use of an existing account, or the attempted use of an existing account like a bank account or credit card. More than 85 percent of American victims of identity theft have reported the theft or attempted theft of funds available through these kinds of accounts. A credit freeze would not have prevented attacks like these, but there are other steps available to you that can lower the odds of this happening.

Additional Credit & Identity Protective Measures

  • Change passwords and utilize two-step verification. With an attack on one of your current accounts being most likely, the protection of your online data is essential, so for any credit card or bank accounts that contain identifying information, be sure to follow recommended password protocol and to opt for two-step verification that involves both a password and an alert through email or cellphone.
  • Change your identity-verification questions. Many users have not updated their security questions since first establishing them when the account was set up, possibly years before. You may have thought “What street did you grow up on?” to be a perfectly innocuous question that only you could answer, but in the era of social media, a Facebook photo of you in front of your childhood home could reveal the answer to anyone who cared to look carefully. Give ample deliberation to all potential security questions and consider where prying eyes might find the answers before selecting them.
  • Use new credit activity alerts. Several services allow you to opt for email or cellphone notifications each time there is a change reported to your credit. These alerts serve as red flags in the event that you did not initiate the change.
  • Complete your taxes in advance. The earlier you file your taxes, the less time there is for potential fraud. The IRS has implemented new strategies for detecting and deflecting tax fraud. In 2015, the organization stopped 1.4 million confirmed identity theft returns and rejected $2.9 billion worth of fraudulent refunds. If you file your taxes long before the deadline, no one else can tinker with your earnings and Uncle Sam can double check that no one else is targeting your refund.
  • Monitor your credit report and current accounts regularly. For personal bank and credit reports, a daily check would not be ill-advised and a minimum of a weekly check is strongly encouraged. Though officially you are entitled to an annual credit report, monitoring activity with more frequent regularity is recommended. The sooner you earmark suspicious activity, the sooner it can be dealt with.

An event like the Equifax breach can shake the confidence of even the most confident of consumers, but it is important not to believe everything you hear. A credit freeze, though helpful, will not save you from the threat of identity theft. The truth is, there is no one-stop solution, but a series of actions can definitely lessen the likelihood of a compromise of your funds and identity. Equifax victimized you by not keeping your sensitive data safe, but by taking these actions to defend yourself, you take back control.