Credit freezes are one of the strongest actions you can take to prevent damage from identity theft.
When you freeze your credit, lenders can’t access your credit report to assess the risk of lending you money. Even if they have your personal information, thieves can’t open new accounts in your name. You can’t, either – but you can thaw your account and re-freeze it once you’re finished with new credit applications.
Unfortunately, a credit freeze doesn’t cover all potential sources of fraud. Credit freezes don’t affect existing accounts. You must take separate steps to protect them.
To exploit existing accounts, thieves must have enough information to access them – such as log-ins and passwords. Start by assuming that your data has been breached and that you’re on the defensive.
Check all bank and credit card statements for any fraudulent charges and review a copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion). You can check your credit score and read your credit report for free within minutes by joining MoneyTips. Immediately address any unfamiliar charges, even if they’re small. Criminals may try a smaller charge first to see if you’re paying attention before making large (and easily detectable) charges.
If you believe that your data has already been compromised, consider credit-monitoring services. At the very least, take advantage of any fraud alert programs from your card issuer. They will notify you of any suspicious activity.
Next, assume your information is currently safe. Set up your strategy to keep it that way.
Use only strong, hard-to-break passwords and change them frequently. Be cautious with printed documents containing sensitive information – store the ones you need to keep in a lockbox or other safe environment and shred the rest before disposal.
Take similar care with your electronic communications. Never open suspicious e-mails or answer phishing scams. If you aren’t sure, call the card issuer using the number on the back of the card – don’t use embedded links or phone numbers in e-mails.
Do you use unsecured wireless connections to check your accounts or shop online? Don’t. Stick with trusted websites and known secure connections. Protect your router and computer by installing all security updates and keeping anti-virus software current.
Even when your existing accounts are protected, and your credit is frozen, criminals have other ways to cash in on your stolen identity. For example, they may file a tax return in your name claiming a fraudulent refund. To prevent this, you must file your return before criminals file theirs. The IRS will assume that the first file received is correct, and it will take a lot of effort to convince them otherwise.
With today’s high cost of medical services, medical identity fraud is also a concern. Credit freezes won’t protect against someone using your identity for billing purposes.
You can’t prevent medical fraud, but you can limit the damage by catching it early. Check your mail for any signs of explanation of benefits or bills for medical services that you didn’t receive. Don’t assume that letters from unfamiliar medical or insurance groups – or worse, bill collectors – is junk mail.
If a criminal uses your identity to gain employment, you could receive a tax bill for the criminal’s earnings. Check your account with the Social Security Administration to verify that your earnings are correctly reported.
Thieves have many ways to turn your stolen information into cash and services. Credit freezes are an important part of that strategy – but they’re only a part. You need a comprehensive approach to foil identity thieves. Think of ways a thief could exploit your information – and then take action to prevent those paths.
If you would like to monitor your credit to prevent identity theft, join MoneyTips and check out our free Identity Protector tool.