Protecting Your Credit and Personal Data From Data Breaches
Data breaches and identity theft can put your personal and financial information at risk. While you cannot always prevent your information from being exposed, there are steps you can take to make it more difficult for someone to use your information fraudulently.
Do One Thing: If you believe you may be a victim of fraud, consider placing a credit freeze with each of the three major credit reporting agencies. A credit freeze can help prevent someone from opening new accounts in your name.
Protecting Your Financial Accounts
Data breaches can expose sensitive information, including Social Security numbers and other personal details. As more personal information is stored and shared online, taking steps to protect your financial accounts and credit can be an important part of managing your financial security.
According to the Identity Theft Resource Center, more than 350 million people were impacted by data compromises. These incidents are a reminder to regularly review your accounts, monitor your credit and understand the tools available to help protect your information.
Understanding Fraud Alerts and Credit Freezes
Fraud alerts and credit freezes can both help protect your credit, but they work in different ways. Understanding the difference can help you determine which option may be appropriate for your situation.
What Is a Fraud Alert?
A fraud alert is a notice placed on your credit report that tells creditors to take additional steps to verify your identity before opening a new account in your name.
You only need to contact one of the three major credit reporting agencies to request a fraud alert. The agency you contact must notify the other two agencies.
Types of Fraud Alerts
According to the Federal Trade Commission, there are three types of fraud alerts:
- One-Year Fraud Alert: Anyone who suspects they may be a victim of fraud can place a free one-year fraud alert on their credit report. The alert can be renewed after one year.
- Extended Fraud Alert: This free alert is available to people who have experienced identity theft and have completed an FTC identity theft report or have an applicable police report. An extended fraud alert lasts for seven years.
- Active Duty Alert: Active-duty service members can place a free one-year alert on their credit report. The alert can be renewed for the length of their deployment.
How to Set Up a Fraud Alert
Setting up a fraud alert is relatively simple:
- Contact one of the three major credit reporting agencies.
- Request a fraud alert and provide the required information.
- The agency you contact will notify the other two agencies.
- Review your credit reports and accounts for activity you do not recognize.
What Is a Credit Freeze?
A credit freeze restricts access to your credit report, which can make it more difficult for someone to open a new credit account in your name. Credit freezes are free to place and can remain in place until you choose to remove or temporarily lift them.
If you need to apply for a new credit card, loan or other form of credit, you can temporarily lift the freeze and reinstate it afterward.
When Should You Consider a Credit Freeze?
A credit freeze may be worth considering if you are concerned that your personal information has been compromised or if you have experienced identity theft.
Some financial professionals also recommend credit freezes as a general precaution. Megan Kopka, a financial advisor with Apprise Wealth Management, recommends using a credit freeze and lifting it when you need to apply for new credit.
Dana J. Menard, a certified financial planner and founder of Twin Cities Wealth Strategies, Inc., has also recommended several steps for protecting personal information, including:
- Setting up fraud alerts when appropriate
- Using a credit monitoring service
- Requesting an IRS Identity Protection PIN
- Freezing your credit with all three major credit reporting agencies
No single step can eliminate the risk of identity theft, but using these tools together can provide additional protection and make it easier to identify suspicious activity.
Don’t Forget About Your Children
Identity theft can affect children as well as adults. Parents and guardians can request a credit freeze for children under age 16, which can help prevent someone from using a child’s personal information to establish fraudulent credit.
Because children typically do not use credit, identity theft involving a child’s information may go unnoticed for years. Checking whether your child has a credit report and taking steps to protect their information can help reduce that risk.
How KCU Can Help
Protecting your personal information is an important part of protecting your finances. KCU offers tools and resources that can help you monitor your accounts and identify potentially suspicious activity.
If you notice unusual activity or have questions about protecting your financial information, KCU’s team can help you understand your options and determine what steps to take next.
Taking a few practical steps to monitor your credit and protect your personal information can help you be more prepared if your information is ever compromised.
Information in our blog posts is made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy, their applicability to your circumstances or guarantee of credit. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.