What You Should Do if Your Personal Data is Compromised

by Ryan Muscatella, CFP®, APMA®

Identity theft and online scams are becoming increasingly prevalent, and the methods criminals are using to exploit individuals are becoming increasingly sophisticated as well. Concerns about protecting personal financial information are growing, and many people are looking for effective ways to safeguard themselves. One approach gaining attention is credit freezing. But what exactly is credit freezing, and how can it help protect against identity theft?

Freezing your credit can help prevent unauthorized access to your financial and even personal information by preventing creditors from accessing your credit report and opening accounts in your name. While freezing your credit can prevent new credit fraud, it won’t stop fraud on existing accounts.

We’ve created a guide that explains the pros and cons of freezing your credit and how to freeze your credit with the three main credit bureaus —Equifax, Experian, and TransUnion.

Freezing your credit is a simple process that you can complete online, by phone, or by mail:

  1. Equifax
  2. Experian
  3. TransUnion

When you freeze your credit, you will receive a PIN or password from each bureau, which you will need to unfreeze your credit in the future.

 

Pros and Cons of Freezing Your Credit

Pros:

  1. Prevents New Credit Fraud: A credit freeze makes it nearly impossible for fraudsters to open new credit accounts in your name, as lenders cannot access your credit report without your permission.
  2. Free of Charge: A credit freeze is free for all consumers, including placing, lifting, and removing the freeze.
  3. Doesn’t Affect Current Credit Accounts: A freeze won’t impact your existing credit accounts or your credit score. You can still use your credit cards, apply for jobs, and buy insurance.
  4. Peace of Mind: Knowing that your credit report is inaccessible to potential fraudsters can provide a sense of security, especially if your personal information has been compromised.

Cons:

  1. Inconvenience: If you need to apply for new credit, you must unfreeze your credit report with all three bureaus, which can be a hassle if you’re in a rush.
  2. Doesn’t Prevent All Types of Fraud: A credit freeze doesn’t stop all types of fraud. For example, it won’t prevent fraudulent charges on existing credit cards or stop identity thieves from using your Social Security number for employment or tax fraud.
  3. Requires Management: You’ll need to keep track of your PINs or passwords to lift the freeze when needed, and you must remember to unfreeze your credit in advance when applying for new credit.
  4. Not a Substitute for Monitoring: A credit freeze helps prevent new accounts from being opened but doesn’t alert you to unauthorized activity on existing accounts. It’s still important to monitor your credit reports and financial accounts regularly.

 

While freezing your credit is a valuable tool for protecting yourself from identity theft, it’s essential to weigh the pros and cons to determine if it’s the right step for you.

If you need further assistance or have any questions, please don’t hesitate to reach out to your advisor or contact our team.

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