Yesterday one of my clients told me that there had been a credit card breech on one of their MasterCard. Their card had to be closed and a replacement ordered. Luckily for them, the credit card company noticed unusual activity and notified them right away, before any serious harm occurred. This resulted in the lengthy process of calling every company who is auto-debiting their account.
While making these calls, I heard a story from of their business associates who had their identity stolen. They said someone was able to use their social security number to open up multiple lines of credit and then purchase over $56,000 worth of merchandise.
It seems we hear stories like this all too frequently.
So how can we protect ourselves?
Here are two lines of protection that are very effective and simple to set up:
1. Place a Fraud Alert on your credit file. Doing so alerts lenders and others that they should take special precautions to ensure your identity before extending credit. When you place a Fraud Alert, you can provide a mobile or other phone number for lenders to contact you to verify that the party applying for credit is actually you, not a fraudster.
You can place a Fraud Alert by notifying any one the three major credit reporting companies. They will notify the other two and a fraud alert will also be placed on those files, too. An Initial Fraud alert lasts for 90 days and may be renewed.
2. For even greater protection you can place a Security Freeze on your credit. This prevents lenders and others from accessing your credit report entirely, which will prevent them from extending credit. Setting this up requires contacting all three credit bureaus.
Although this provides much greater protection, when you wish to apply for any type of credit, you will have to take special steps to temporarily remove it.