Proactive Steps You Can Take to Protect Your Identity When There Is a Credit Breach

A few weeks ago, people were stunned and outraged to hear of Target’s security breach that left millions of customers who shopped at Target in November and December in a vulnerable position for identity theft because hackers had stolen their credit card numbers.

Now, it appears the news is much worse.  Hackers got not only the credit card numbers but also the e-mails, phone numbers, names, and mailing addresses of customers.   Target also admitted that the damage is worse than thought and that up to 110 million customers may be vulnerable.

Hot on the heels of this news, Neiman-Marcus admitted that their customers also suffered a security breach during the holiday shopping season.

If you, like most Americans, use a credit card for convenience, how can you protect yourself?  Here are a few strategies:

1.  Use cash.

If you return to using cash for all of your transactions, you don’t leave a trail, and your information cannot be stolen, at least at retail stores.  Of course, your information can still be stolen if other places like hospitals or student loan services suffer a hack.

2.  Order your annual credit report.

You can get your annual credit report for free at annualcreditreport.com.  You can get one credit report from each of the credit bureaus–TransUnion, Equifax and Experian–once per year.  The smart way to do this is to order your free credit report from a separate bureau every 3 to 4 months.   So, in January, order your free report from TransUnion.  In May, order from Equifax, and in September, order from Experian.  This way your able to check your credit report frequently for suspicious activity.

3.  Pay for a credit monitoring service.

For about $80 to $100 a year, you can enroll in a credit monitoring service.  The idea is that if your identity is stolen, you’ll be notified quickly, before the damage is too great.  Many credit monitoring services also can assist you with restoring your credit if it is stolen.

4.  Freeze your credit.

While steps 2 and 3 can help you discover fairly quickly if your identity is stolen, you learn after the fact.  Your identity can still be stolen, and you’ll still have a headache cleaning up the mess.  Freezing your credit is the only sure fire way to prevent identity theft.

When you freeze your credit, no one is allowed to access your credit or open a new line of credit–even you.  If you’d like to apply for a credit card or take out a loan, you have to call the reporting bureau and use the pin you were given when you froze your credit to thaw it.  You can thaw it forever or for a certain amount of time, such as for a week.  You may have to pay a small fee to freeze or thaw your credit.

If you’re worried about security breaches and the possibility of your identity being stolen, the only sure ways to prevent it are to use cash or to freeze your credit.  If that’s inconvenient for you, at least order your credit report regularly or hire a credit monitoring service.