MONEY identity theft

The One Thing Everyone Should Do Now to Prevent Identity Theft

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Sarina Finkelstein (photo illustration)—Getty Images (2)

Get a security freeze, whether your information has been stolen in a data breach or not

Chances are, your Social Security number has already been exposed in a data breach. Do you have health insurance from Anthem or Premera Blue Cross? Is your cellphone on T-Mobile? Did you apply for a job that requires a government security clearance? If so, you’re already vulnerable to identity theft.

But even if you weren’t affected by any of those massive data breaches, consumer advocacy group U.S. Public Interest Research Group (U.S. PIRG) has some advice for you—it’s time to put a security freeze on your credit report. That’s the recommendation of its recent report, “Why You Should Get Security Freezes Before Your Information is Stolen.”

Here’s why: Firms continue to get hacked. Cyberattacks can go on for months, or even years, before they are detected or publicized. Even if you haven’t yet been notified that your data has been exposed, you could be at risk.

What’s the danger if your data is exposed? The fear is that once a fraudster has your Social Security number, he can apply for a credit card or a loan in your name. The lender will first take a look at your credit history. Then, if the line of credit is approved, the identity thief can run up debt in your name with no intention of paying it back. That can wreck your credit score before you even know you’ve been exposed. Having a bad credit score can make it much harder to get credit cards, loans, apartment rentals, mortgages, even jobs. And it’s not just hypothetical: According to the Bureau of Justice Statistics, 1.1 million Americans reported that they were victims of new account identity theft in 2014.

The solution is to make it impossible for lenders to check your credit history without proof that you are the one applying for credit. That’s what a “credit freeze” does. When you freeze your credit report, you will be given a special PIN number. No one will be able to access your report without that PIN. If you want to apply for credit, you’ll have to unfreeze or “thaw” your report by providing the PIN number as proof of your identity. Without it, fraudsters won’t be able to open new lines of credit in your name.

There are some downsides to credit freezes, mostly financial. It can cost $3 to $10 to place a credit freeze (costs vary by state). And multiply that cost by three, because you should freeze your credit reports at each of the main bureaus: Experian, Equifax, and TransUnion. Then you may be charged a fee of $2 to $12 whenever you want to lift the freeze and apply for credit. (Some states offer free freezes to all consumers, and identity theft victims can also get free freezes.)

But for many, this minimal cost and hassle would be far preferable to the time and effort required to rebuild your financial reputation if your identity were stolen. That’s why U.S. PIRG is now recommending a freeze for all consumers. “Whether your personal information has been stolen or not, your best protection against new account identity theft is the security freeze,” the report concludes.

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