How to Protect Your Credit After the Equifax Breach

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Approximately 143 million records were stolen in the recent breach of Equifax, including names, Social Security numbers, birth dates, and addresses. Even before the Equifax incident, identity theft has been on the rise. With this recent theft of millions of records, the risk of credit fraud is sure to grow.

You can take measures to protect yourself from identity theft. These options range from watching out for suspicious activity on your accounts, to paying for credit monitoring services or even freezing access to your credit reports.

Is it worth the trouble and expense to freeze your credit report, or can less intensive steps sufficiently mitigate your risk of identity theft? Here are the options available to you.

Manual account monitoring

You can check your monthly statements from existing bank and credit accounts for unexpected transactions. If you see a transaction you did not make, you have a major red flag.

How much cost and effort?

The cost is zero, but it takes effort to stay on top of all your statements and look for unexpected activity. If you spot theft, you will need to work with your financial institution to undo the fraudulent transactions.

How much protection?

In many cases, you will not be responsible for fraudulent transactions if you report them to the financial institution and work to resolve the issue. (See also: Why Credit Is Safer Than Debit)

Manual credit report monitoring

In addition to monitoring transactions on your existing accounts, you need to keep watch in case thieves open new credit accounts using your stolen personal information. You can request a free copy of your credit reports every 12 months from the major credit bureaus (TransUnion, Equifax, and Experian) and manually check for new accounts that were created by someone else.

How much cost and effort?

Free if you use the free credit reports, limited to one per year per credit bureau. If you want to check your reports more frequently than once per year, you can pay a small fee, typically around $10 per report.

How much protection?

Even if you are diligent in requesting and checking your credit reports, a fraudulent account could go unnoticed for some time due to the delay between when a fraudulent account is created and when you obtain an updated credit report and notice the new account.

How to get your free credit reports

Visit AnnualCreditReport.com to request your free credit reports. You can request reports from all three credit bureaus at once, or you can order from one bureau at a time. Ordering one free report every four months can help you keep an eye on your credit throughout the year without paying any fees.

Credit report monitoring service

You can sign up for credit monitoring services that send alerts when new credit accounts are opened, or when a credit inquiry has been made on your report. (See also: Is Credit Monitoring Ever Worth It?)

How much cost and effort?

Credit monitoring services are offered by the credit reporting agencies and other companies with costs ranging from a few dollars per month up to $25 per month. Free credit monitoring is available from Credit Karma whose free service is supported by loan and credit offers.

Credit monitoring is automatic in the sense that it provides alerts when an inquiry occurs or a new account is opened, but you will need to check the alerts to see if the activity is legitimate. And if there is fraudulent activity, you will need to take steps to counter it.

How much protection?

Credit monitoring provides alerts when new credit accounts are opened, but it does not stop thieves from opening fake accounts. The automatic monitoring simply helps you spot fraudulent new accounts quickly and take action to reverse charges and close the accounts.

Identity theft insurance

Identity theft insurance pays for some of the expenses you could incur associated with restoring your identity, including legal fees and fees from financial institutions. Coverage may also include out-of-pocket losses from credit fraud or other misuses of your personal information.

How much cost and effort?

Identity theft insurance typically costs around $25 to $60 per year and may include credit monitoring and other services.

How much protection?

If you become a victim of identity theft and are covered by identity theft insurance, the ball will still be in your court to resolve the issues. The insurance will cover certain types of expenses you may incur and limits your out-of-pocket losses.

Fraud alert

You can place a fraud alert on your credit report, which notifies credit issuers to contact you for confirmation before setting up a new credit account. An initial fraud alert stays on your credit report for 90 days, and you can extend it for another 90 days after that. An extended fraud alert for confirmed cases of identity theft lasts for seven years.

In addition to putting a fraud alert on your credit report for new credit accounts, you can also request a security alert with ChexSystems for new checking and savings accounts.

How much cost and effort?

It is free to place a fraud alert on your credit file. Once you put a fraud alert on your file with any one of the three major credit reporting agencies, it will be shared with the other two.

How much protection?

When a fraud alert is on your credit report, credit issuers are supposed to contact you before opening a new credit account, but compliance may vary.

Credit report freeze

A credit freeze with the credit reporting agencies prevents your credit report from being shared unless you "unfreeze" your credit report. This prevents thieves from opening fraudulent new credit accounts using stolen personal information.

How much cost and effort?

A credit freeze comes with a higher level of hassle and cost than some other fraud prevention measures. You need to freeze your credit report with each of the three credit reporting agencies, which means requesting the freeze three times. Then every time you want to apply for a credit account, or allow access to your credit report for an employment or housing application, you will need to unfreeze your credit report, then refreeze it afterward.

You'll pay fees every time you freeze or unfreeze your account. The fees vary by state, but generally they range from $5 to $15 for each freeze and unfreeze. Note that in light of the security breach, Equifax is offering free credit freezes until November 21, 2017.

Each bureau will give you a personal identification number (PIN) that you'll need to keep track of in order to unfreeze your reports. You can also request a security freeze with ChexSystems to block new checking or savings accounts from being opened at no cost.

How much protection?

A credit freeze is effective at stopping new accounts from being opened, but you'll still need to monitor existing bank and credit accounts for fraudulent activity, since existing accounts are not affected by a credit freeze. If you know you'll be applying for credit (or a job or apartment that might require a credit check) multiple times in the near future — or if a credit freeze just sounds like too much hassle — you may be better off signing up for a credit monitoring service and perhaps placing a fraud alert on your credit report instead of doing a freeze.

If you rarely or never apply for credit, and will not need to provide access to your credit report for employers or landlords, you may be better off freezing your credit report indefinitely. Keep in mind, though, that it is possible that the PIN needed to unfreeze your credit report could be compromised by thieves, who could unfreeze your credit report themselves. For added protection, you could place a fraud alert on your credit report before freezing it.

A "lock" may be another option

Starting January 31, 2018, Equifax will be offering consumers a new, permanent service that gives them the ability to "lock" and "unlock" their credit report at will. This new service is reported to work in a similar fashion to a freeze, and it is yet to be determined what exactly will differentiate the two methods. Equifax claims the service will include more "modern authentication techniques" for unlocking and accessing your credit report. If you elect this route, make sure to carefully read the terms and conditions before signing up.

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