How to Protect Yourself After a Data Breach
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Large data breaches that expose consumers' sensitive personal information have become a routine part of life. So it pays to know your options if your data has been compromised.
What are three kinds of data breaches?
According to the Federal Trade Commission, there are three major types of data breaches:
Hackers stealing information from company servers.
An employee stealing or mishandling company information.
Private information accidentally being exposed.
Your private data can also be stolen if your personal devices or passwords are compromised. For example, if your phone is stolen or your banking password is leaked, criminals and scammers could gain access to your personal information and damage your finances and other areas of your personal life. Clicking on suspicious emails or links in text messages can also lead to privacy concerns.
What to do if your data has been compromised in a breach
Whether your financial data has been compromised or you simply want to proactively guard your credit, follow these steps to safeguard your financial life:
1. For best protection, freeze your credit
A credit freeze makes it unlikely your stolen financial information can be used to open new accounts in your name. Most creditors check your credit history as part of the application process — with a freeze in place, they can't access your credit history and will decline to open a new account.
Freezing your credit doesn't affect your score. And when you want to open up a new credit line, you can simply unfreeze your credit temporarily. This is sometimes referred to as a "credit thaw."
Freezing and unfreezing your credit at each of the three credit bureaus — Equifax, Experian and TransUnion — is free to all consumers. You can complete this action online, over the phone or by mail.
Freezing a child’s credit
Freezing a child’s credit protects them from identity theft, which can go undetected for years until it’s time for them to open credit of their own. While you can freeze your credit quickly online or by phone, freezing a child’s credit takes a few extra steps:
Print out child freeze request forms from Equifax and Experian (TransUnion doesn’t have one but you can download this letter to complete).
Second, print hard copies of the following documents for each of the three major credit bureaus:
A copy of your government-issued ID, like a driver’s license.
A copy of your birth certificate and your child’s birth certificate.
A copy of your Social Security card and your child’s Social Security card.
A utility bill or bank statement with your name and address on it.
While the bureaus provide P.O. box addresses to send these documents, it’s understandable that you might feel unsure, especially if your child has been a victim of a data breach. NerdWallet recommends sending these documents using certified mail, so you can guarantee a signature on the receiving end.
2. Place a fraud alert if you can't freeze right now
If you don’t want to lock out creditors — perhaps you're in the middle of applying for a mortgage or car loan — you can instead add a fraud alert to your credit reports.
This type of alert flags potential creditors that they should verify your identity before issuing new credit in your name.
A fraud alert lasts for a year and is renewable. You need to contact only one of the three bureaus and ask for the alert; it will notify the others.
For best protection, remember to freeze your credit at all three bureaus once you're done with your applications.
3. Check all 3 credit reports
The credit bureaus offer free weekly credit reports through AnnualCreditReport.com.
Check over your reports for signs of trouble, especially:
New accounts that you didn’t open.
Credit inquiries that don’t match when you applied for credit.
Balances that don’t match your statements.
You can also monitor your credit frequently by taking advantage of a free credit report source.
4. Watch your credit card activity
Freezing can stop new accounts from being opened in your name — but it can't prevent fraudulent charges on an existing account. Protect yourself in these ways:
Stay on top of your credit card statements. Look for charges you don’t recognize and if something seems fishy, dig into it. There’s often a phone number listed along with the merchant name for each transaction.
Sign up for text or email alerts about credit transactions. Many credit card issuers let you set them for every charge, or ones above a certain dollar amount.
Dispute suspicious charges immediately. Call your issuer to get more details about a charge you don't recognize. Most often, your liability is limited to only $50 and perhaps less.
