If you're an adult in the U.S., your identity is at risk...
According to the latest report from the Identity Theft Resource Center, data breaches soared 68% from 2020 to 2021. There were 1,108 breaches in 2020. That rose to 1,862 breaches in 2021.
Last year, we saw the greatest number of reported data breaches ever. The previous record was 1,529breaches in 2017.
While most of these breaches are small, we've seen plenty of massive data breaches over the past several years...
In 2017, Equifax admitted a hack had exposed the personal information of 145 million Americans. That was nearly every American with credit history. The hack exposed information like Social Security numbers, addresses, and birth dates... the key information someone would need to steal your identity.
One of the biggest data breaches of 2021 was Facebook's hack, which included the personal information – phone numbers, birth dates, and e-mail addresses – of more than 500 million Facebook users.
The data from these hacks are leaked on the "dark web" – the Internet's black market. This is where fraudsters can buy your personal information from any hacked account's data... including your name, address, credit-card numbers, or even Social Security number.
In our increasingly digital world, there's a constant battle between companies that hold your sensitive information and criminals that want to steal it.
It might seem like a hopeless pursuit, but there are steps you can take to lessen your chances of identity theft and lessen the repercussions if someone does try to use your personal information...
No. 1: Check your credit reports annually.
Each of the credit bureaus offer a free report once a year. Your credit report will list all open lines of credit and debts – any credit cards, mortgages, and loans should be on there.
You should make it a part of your regular financial checkup to request these reports. That's how you can catch identity theft – you'll see lines of credit or inquiries you didn't authorize. Checking your credit report is an essential way to protect yourself.
You can request all three reports at once or spread them out, depending on what works for you. Get all three at once if you want a full picture of your current credit history or stagger them every few months for regular monitoring.
Keep in mind that if you have a big purchase coming up like a house or a car, you'll want to get all three to have the full picture of what your credit looks like. That will help with negotiating leases and mortgages.
No. 2: Keep track of your score.
The FICO credit score comes from the Fair Isaac Corporation (hence the name FICO). Every few years, Fair Isaac changes the formula used to calculate that score.
Overall, the score looks at your payment history, credit limits, credit utilization, and more.
Each credit bureau also has a separate score based on the accounts reporting to them. Approximately 90% of lenders use FICO scores to calculate how likely a borrower will be to default. They then use that to determine interest rates and lines of credit.
The other main type of credit score model is called VantageScore, developed by the three credit-reporting agencies. Both FICO and VantageScore assess things like your payment history, credit limits, utilization, and more. And the tips for having a good score are the same... paying bills on time and making sure you're not using too much of your available credit.
Banks and credit-card companies often allow you to keep track of your FICO score or VantageScore for free.
No. 3: Freeze your credit.
A credit freeze limits third-party access to your credit report. That means lenders can't see your credit report. This prevents thieves from opening a line of credit or taking out a loan in your name. But it also means you can't do those things. If you're applying for a job or trying to rent a home, remember that employers and landlords can't access your credit report.
A credit freeze doesn't stop activity on lines of credit you already have open. So you can keep using your credit cards as you normally would.
You need to freeze your credit with each of the three bureaus, but it's pretty simple – and free. Click below to find the security freeze information for each bureau:
But if you're looking for a new place to live, hunting for a new job, or trying to get a loan, you'll need to temporarily lift the freeze. To unfreeze your credit, you'll need to, again, contact each credit bureau.
How do you keep your identity safe? Let us know at [email protected].
What We're Reading...
- T-Mobile's year of data leaks.
- Something different: Consumer price inflation hit a 40-year high last month.
Here's to our health, wealth, and a great retirement,
Laura Bente, CFP® with Dr. David Eifrig
April 13, 2022