A friend of mine received a letter recently telling her that her application for a home equity loan was denied. But here’s the thing: she didn’t APPLY for a home equity loan!
Did she just laugh and throw the letter away? NO, thank goodness – she knew this could indicate a serious problem. It didn’t take long to learn more – all she had to do was contact the lender that had sent the letter. It turns out that someone ELSE had used HER name and social security number to apply for a home equity loan of several thousand dollars. The loan was turned down due to a couple of small inaccuracies on the application. If the imposter had gotten all the details correct, my friend might have been “on the hook” for that loan – a victim of identity theft.
Do you remember the Equifax data breach a while back? My friend’s information was compromised in that data breach, which is likely how these imposters got her information. That breach was FOUR whole years ago! Many people went “on alert” for months after that breach – but are they still maintaining that vigilance?
There’s a lesson here for all of us: if your information has ever been compromised in any data breach, you must be vigilant forever. Once the information is out there, the “bad guys” can sit on it for years, even decades, and then start to use it. And frankly, even if you are not aware that your information has ever been compromised in a major breach, you should still be fully vigilant, because not all data leaks are exposed, or exposed promptly. This may feel a little discouraging – how can we possibly protect ourselves?
Credit Freeze. The good news is that we DO have options! One of the most effective steps we can take to reduce our identity theft risk is to put in place a security freeze (known as a “credit freeze”) on our files at all three of the major credit reporting agencies. This became a free option for all consumers thanks to a federal law passed after that infamous Equifax breach. With a credit freeze in place, no one can open any kind of credit account in our name. Even WE cannot open an account in our OWN names with a credit freeze in place. My example: two years ago I bought a new car, and borrowed part of the cost. I got home from completing the loan paperwork, and almost immediately got a call from the lender: “Hey, we can’t process your loan application till you lift the freeze on your credit file.” He told me which credit reporting agency he was using, and I went into my records to find the information I needed to lift the freeze. I was able to lift it temporarily – just 3 days – and then the freeze went back into place, so I was protected once again.
A credit freeze is an incredibly valuable protection against imposters opening accounts in our names. The Consumer Financial Protection Bureau provides information about how to “freeze” your credit file. (https://www.consumerfinance.gov/about-us/blog/free-credit-freezes-are-here/)
Check Your Credit Report. Checking your credit report regularly does not prevent identity theft, but it does help to detect it — and like many other situations, early detection can minimize the damage you experience. The one safe resource for free credit reports is www.annualcreditreport.com, a joint project of all three national credit reporting agencies (Equifax, Experian and TransUnion). In normal times each consumer is eligible for one free report per year from each of the agencies (a total of three per year). However, during the COVID emergency, until April 20, 2022, we can check our credit reports weekly if we wish. When you receive your copy, carefully review it and dispute any errors you discover. The Consumer Financial Protection Bureau offers a helpful credit report checklist.
Report ID Theft. If you do discover, as my friend did, that your identity has been used fraudulently, be sure to report the incident at the Federal Trade Commission Identity Theft webpage, www.identitytheft.gov. This site outlines steps you can take to defend yourself, and is a good first stop for identity theft victims.