If you haven’t seen the news recently, you probably missed seeing that Equifax, one of the big 3 credit reporting agencies, got hacked. Some 143 million Americans had their identities (name, address, SSN, etc) compromised. This is bad for a number of reasons, bad because a bunch of people’s information was stolen but also bad because it’s the credit bureau that got hacked– the people that hold way much of your financial livelihood over your head.
Why I’m not happy
Unfortunately, breaches are a part of life for us today. A string of big companies (Yahoo, HomeDepot, Target) have been in the news over the past few years for having their own breaches. Somehow we’re all still here today and hopefully with our finances in order. But when the breach happens at a credit-reporting bureau – that’s bad. They are the folks are the keepers of your financial credit history and if they are compromised, how are we supposed to keep our own credit history intact? I’m also mad because of how they handled it. It took them a few days before they publically announced it, their initial handling of it was sloppy (mis-directing consumers to the wrong website/phone number) and not even initially offering a monitoring/freezing for free, with the audacity to make people pay for it. I initially hesitated writing a blog post on this as I figured it was better to wait and see how things turned out. Ok, enough of my rant and onto some facts/advice.
What is a credit-reporting agency?
Here in the US there are 3 main credit-reporting agencies, Experian, Equifax and TransUnion. These agencies keep tabs of your personal credit history (if you pay on time, how many credit accounts you have open, how much credit is extended to you) and also generate a “score” on your credit worthiness. If you’ve ever checked your credit score, it’s actually a proprietary formula created by each of the agencies. These credit agencies actually work for the banks/credit card agencies instead of you. They merely record all your credit records, and then provide them to banks/lenders when you request credit (i.e. apply for a credit card or a loan). Fun fact – although you’re not entitled to your credit score (because it’s part of their secret sauce that they make you pay for), you are entitled to a copy of your credit report (all the stuff that go into your score) once a year. Head to annualcreditreport.com to retrieve it.
What can I do?
There are a couple of different options that you could take. What’s at risk here is your credit history. An identity thief could use your data to apply for a credit card, a bank loan or anything else – in your name. They’d’ rack up a bunch of charges long before the bank found out it wasn’t you making those purchases. The good news is that you won’t be liable for those charges; the bad news is that it’ll take a lot of work to clean up that mess as well as the damage done to your credit score. What you can do, and what many people are doing is either putting a freeze on their credit history, or putting a fraud alert on it. Putting a fraud alert is free, lasts 90 days and will force any bank/institution to be careful before lending you (or an identity thief) money. They will do more due diligence to verify you are who you say you are and may even personally contact you to confirm. Check out this article on the Federal Trade Commission’s website (aka a trustworthy website) for more info. A step further would be to put a freeze on your account, which basically locks your credit information down and lets no one review/access it. That’ll disallow you (or an identity thief) from getting any credit in your name. Unfortunately, a credit freeze is decently cumbersome (involves calling each agency and setting up a PIN) and can cost a few bucks a month to maintain. While Experian is offering a credit freeze for free (although they didn’t initially!), you’ll have to pay the other 2 agencies to initiate the freeze. Really a total freeze with all 3 is the only way to truly play it safe. Finally, you could also sign up for a credit/identity monitoring service to be very proactive – but that’ll cost a few more dollars each month.
What should I do?
I honestly don’t know what to recommend here. One part of me admits that your personal credit is super important and although you could clean up a mess made by someone else – it’d be a lot of time and effort to do so. The other part wonders if it’s worth it. With so many hacks and personal identity theft, you have to wonder if your data is already out there. Should we just have faith in the process (probably not…) and assume that your credit will be protected? It almost seems that you can be proactive and either freeze/monitor, or hope for the best and be reactive by cleaning up any mess that comes along. I personally am currently airing on the reactive side of things. A freeze/alert seems cumbersome to me and it feels a little off for me to have to pay the credit bureau to protect my data when it’s their job basically to do so. Ata minimum, there are ways to keep an eye on your score without paying/freezing. You’re entitled to a credit report once a year, and a lot of credit cards that I’ve seen recently (including 2 of mine) will give me my credit score for free. I do keep an eye on that and if it ever went down or if I saw changes to it – I would immediately take action and contact the bureaus. Like I said, I don’t have the right answer. Do what feels right to you to keep your credit safe! I personally am a little more reactive than proactive, but that’s just me!