This has been a good year for hackers. To date, businesses, medical centers, banks and schools have suffered some 578 data breaches, exposing over 76 million records of personal and financial information.
Home Depot recently announced its database had been breached, with hackers making off with around 56 million payment card numbers. Earlier in the year, Neiman Marcus and Michaels revealed similar hacks, exposing 1.1 million and 2.6 million records respectively.
While some fraudsters might take advantage of stolen information to clear out your bank account or make claims on your insurance policies, a more insidious form of identity fraud has emerged based on scammers who create whole new accounts — bank accounts, store accounts, credit card accounts — in your name.
Identity thieves can use your personal information to open and max out multiple credit cards, apply for loans and place deposits on big-ticket items. This activity all goes onto your credit profile, eventually sinking your credit rating. Yet you might never find out about the unauthorized activity until the debt collectors come calling or you find yourself summarily rejected for a loan or mortgage application.
Many folks have turned to credit monitoring services that will notify you about unusual activity. But that’s the equivalent of closing the door after the horse has already left the barn. At that point, thieves have already opened accounts and compromised your credit.
So what can you do to thwart identity thieves? The major credit bureaus let you freeze your credit or add a fraud alert. Both are free, but each has its limitations.
Closing any compromised credit and bank accounts can stem your financial losses, true. But thieves can continue opening false accounts and piling up debt on your credit profile, making it impossible to successfully apply for credit.
To stop thieves in their tracks, put a security freeze on your credit profile, which prohibits lenders and companies that are trying to check your credit from accessing your profile. This prevents thieves from opening new accounts under your name, because creditors are unable to check your credit history.