The great Equifax security breach

 

Recent events involving the hacking of the credit reporting giant Equifax has left many people confused and nervous about the affect this could have on their financial lives.

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What we know

  • The reported hack occurred between mid-May and July
  • The extent of the breach is still being investigated. Up to 143 million Americans may be affected. Personal information at risk includes Social Security numbers, driver license, and credit card information. This has affected approximately 44% the U.S. population between the ages of 18 and 60
  • The stoleninformation can be used to open lines of credit, file taxes, obtain drivers’ licenses, run up medical bills, or commit crimes

what is equifax ?

The industry consists of three major credit reporting agencies (bureaus) Equifax, Experian and TransUnion which are separate and in competition with each other.   They collect information such as loan balances, credit card balances, payment history, account status and public information on all of us. This information is then sold as your credit report to banks, credit card companies and other lenders that use it to determine credit limits and interest rates for borrowers.

credit scores vs credit reports

There is a misconception that your credit score and credit histories are the same thing.   While your credit report contains detailed information of your past use of credit, your credit score is a number that lenders will use in order to determine your credit worthiness and make credit decisions, such as the interest rate for a car loan or mortgage.

The most widely used credit score is a FICO® score created by Fair Isaac Corp.  By comparing this information to the patterns in hundreds of thousands of past credit reports, FICO® Scores estimate your level of future credit risk. FICO scores range from 300 – 850. The higher your score the lower your risk level.

Best course of action

What to do next depends on your situation.  Since we don’t know who has the stolen data or how they intend to use it, There are several things you can do to protect yourself.

  • Get a copy of your credit history to determine if there is any suspicious activity. To request your free copy go to: www.annualcreditreport.com Be sure that you recognize and understand all the items in the report as this is the first place suspicious activity will show up. You should check your credit history on a yearly basis, with all three agencies.
  • Set up a fraud alert which will only alert you if someone is trying to open a line of credit in your name.  These alerts last only 90 days ; or if you have been the victim of identity theft it will last for 7 years.. 
  • Put a credit freeze on your account with Equifax, TransUnion and Experian. The cost varies from state to state and is free in some states.

What does a “freeze” accomplish?

A credit freeze is the best way you can protect your personal and credit information. The freeze will lock your credit files so that only companies you currently do business with will have access to them. Once a credit freeze has been put on your account you will have to take steps with each agency to temporally lift this freeze if you want to obtain new credit. 

It is important to note that even if you have a credit freeze on your account some 3rd parties will still have access to your credit report:

  • Companies that have current accounts or relationships with you
  • Collection agencies acting on behalf of companies that have a current account or existing relationship with you
  • Credit monitoring companies
  • State or local agencies including law enforcement or child support agencies
  • Federal government agencies as permitted under the Fair Credit Reporting Act

How to freeze your credit information

In order to freeze your credit report you must contact each of the credit agencies independently either by phone or online.

Fees vary by state, but commonly range from free to $10.

After receiving your freeze request, each credit reporting company will send you a confirmation letter containing a unique PIN (personal identification number) or password. Keep the PIN or password in a safe place. You will need it if you choose to lift the freeze.

Equifax - www.equifax.com - (800) 349-9960

Experian - www.experian.com - (888) 397-3742

TransUnion - www.transunion.com - (888) 909-8872