This is a guest post written by Derek at The Money Family. Derek writes about family-focused personal finance and strives to teach families how to make money, save money, and live the lives they dream of.
In today’s digital world your identity is everywhere. Banks, doctors, credit bureaus, insurance agencies, etc, all have access to your personal information.
Unfortunately, that means your identity is being stored by dozens, if not hundreds, of different companies and it only takes one breach for your personal information to fall into the wrong hands.
We recently found out about this the hard way when I woke up to a text from a bank we had never used confirming my attempt to open a new credit card and checking account.
Upon further inspection I found a dozen different applications for accounts opened in my name with banks large and small across the US.
Luckily, I was able to prevent most of the damage early by taking some proactive steps.
Here are some ways you can help to protect your finances if your identity is stolen.
Check Your Credit
If you’ve never checked your credit before today is a great time to start. Once per year you can get a FREE copy of your credit report from each of the three major reporting bureaus from AnnualCreditReport.com.
The three major credit reporting bureaus are Experian, Equifax and Transunion. Each report may vary slightly so it’s a good idea to check all three at once.
Things to check for discrepancies are addresses, prior job history, credit inquiries, and open accounts.
Be Proactive With Credit Monitoring
While checking your credit once a year is a great start you should also take steps to actively monitor your credit so you can catch and resolve identity theft issues quickly!
Luckily there are some great free credit monitoring options available so this doesn’t have to cost an arm and a leg.
We personally use Credit Karma to monitor our credit scores and get updates on any new credit activity like hard inquiries and new accounts. The only downside with Credit Karma is they only offering monitoring for two of the three credit bureaus so it is still a good idea to check all three reports annually.
When our identity was stolen we found a number of hard credit inquiries on one credit report that weren’t listed on the other two.
Act Fast if You Suspect Suspicious Activity
Time is of the essence if you suspect that your identity is being used to open fraudulent accounts. Not every bank or financial institution is going to have the same fraud monitoring processes so the most important thing for you to do is act quickly.
Here are our recommendations for what to do to protect your finances if your identity is stolen.
1 – Place A Fraud Alert and/or Freeze Your Credit With the Credit Bureaus
Each of the three credit monitoring bureaus have options to place fraud alerts and credit freezes on your account.
Placing a fraud alert means that businesses must verify your identity before opening any new accounts in your name. Fraud alerts expire after one year and are only available to people who are a victim of identity theft.
Credit freezes freeze all access to your credit until you lift the freeze using a secret pin. This option is available to anyone and has no expiry. If you don’t anticipate opening any new credit accounts soon this can be a good option for securing your credit. Even if you do need to temporarily unfreeze your credit it can be quickly done online.
Note that fraud alerts and freezing your credit will prevent future accounts from being opened but it will not stop any fraudulent credit applications that have already been filed.
2 – Check All Three Credit Reports
As we said above it is important to check all three credit reports as the information on each may vary.
Go to the hard inquiry section and make a note of any financial institutions that you don’t recognize. Do the same with your open accounts section.
3 – Contact All Financial Institutions Listed on Your Credit Report
This step is by far the worst when dealing with the early stages of identity theft. None of the banks seem to want to make it easy to report suspected fraud with many repeatedly asking for information like an account number before I could proceed through the phone tree.
When you get to the fraud department tell them that an account has been opened using your identity or fraudulent charges have been made on your account and you would like to report it as fraud.
At the end of the call, ask them to send a letter confirming that the fraudulent charges and/or accounts were removed. Having a paper trail is important to ensure you can remove these inquiries from your credit report and dispute any fraudulent transactions.
Also, if you suspect an account has been opened in your name with a financial institution but they are pushing back then ask to talk to someone else. One credit card company told me three times that it was a credit bureau reporting issue and no applications were opened using my identity. Finally, the 4th person was able to confirm that there was in fact an open application and they marked it as fraud.
4 – File an Identity Theft Report with the FTC
The FTC has an online identity theft reporting tool you can fill out. This tool lays out the steps to take in the case of identity theft and helps build a paper trail in the event you have to dispute future fraudulent charges with companies or debt collectors.
5 – File a Police Report
This step is optional and is one we chose not to take. We felt that we had caught everything early enough that the FTC report was enough. However, if accounts had been successfully opened and charges made in our name we would have taken this step.
6 – Change Your Login Information for All Existing Accounts
If the credit thief had enough information to open accounts in your name, they may also have had enough info to access your existing accounts.
We actually received a notice that someone had attempted to clone our phone number to bypass the 2-step authentication processes on some accounts. Scary stuff!
7 – Keep an Eye on Your Accounts and Credit
We got lucky in catching our identity theft early and closing (hopefully) all of the accounts opened in our name. We still need to be vigilant though, as our information could be used to file fraudulent tax returns, open accounts in the future or, if we missed closing any, could lead to future collections notices in our name.
Final Thoughts on how to Protect Your Finances if Your Identity is Stolen
Identity theft is a pain. We ended up spending hours and hours on the phone dealing with banks large and small. One place we called was a tiny credit union and the only reason the application was held up was because our home address is on the west coast and they thought it was strange that we would be opening an account in Wisconsin.
It sucks knowing there is still someone out there with all of my personal information and I’m not sure that feeling will ever go away. Luckily it seems that we have been able to avoid serious financial damage and hope that this can help anyone out there either get proactive about monitoring their credit or cleaning up the mess after the fact.
Make sure to monitor your credit reports and to act quickly when you suspect fraudulent activity. Early detection is important to protect your finances if your identity is stolen.
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