Even before the Equifax data breach rocked the financial sector in 2017, credit was important. If you want to get a loan, and especially if you want to buy a house, you can count on getting your credit report checked by a professional.
When Equifax, one of three major credit reporting agencies, confessed to the extent of its data breach in mid-2017, consumers were shocked. Then panic set in. People began to realize that their private information, like their Social Security numbers and seemingly secure credit histories, could be at risk. By the latest count, up to 145.5 million people may have been affected by the hack.1
Stay One Step Ahead: 6 Simple Ways to Check and Repair Your Credit
Adding insult to injury, fixing credit report errors is difficult. Even the Consumer Financial Protection Bureau admits their credit investigation and repair practices could use some work.2 Most consumers find the greatest success in preserving their financial integrity by taking matters into their own hands. You can learn how to closely monitor your credit and stop problems before they start.
These tips can help you to keep tabs on your credit, protect your private data, and improve your score over time:
1. Check your credit report right away. Right after the Equifax breach was announced, credit bureaus urged consumers to take action. If you haven’t already, visit AnnualCreditReport.com to request and review your credit report for any suspicious activity. You are entitled to one free credit report every twelve months from each of the three main credit reporting companies: Equifax, Experian, and TransUnion. As advertised on the site, AnnualCreditReport.com is the sole source of free credit reports authorized by federal law.
2. Deal with disputed accounts. Credit disputes may be more likely to happen following the breach. If you see an account on your credit report that shouldn’t be there, it’s important to address it immediately. Contact the creditor of the disputed account along with each of the three major bureaus to remove the incorrect information. Most importantly, do not pay on any disputed accounts. Doing so can negatively affect your credit score.
3. Set up a credit freeze. There’s no telling the impact of the Equifax hack, though financial experts estimate it may take months or years to see its full effect. Just like it sounds, a credit freeze offers a way to buffer outside threats to your credit by placing a security freeze, or a hold, on your credit report. A credit freeze will make it harder for third parties, i.e. hackers, to open up new accounts in your name; creditors will not be able to access your credit report without the hold being lifted.
If you freeze your credit, you’ll need to temporarily lift the freeze the next time you want to take out a loan or line of credit. To place a freeze, contact each of the three credit reporting companies and make the request. Charges ranging from $5 to $10 may apply. A credit freeze may remain in place for up to seven years, in some states. In other states, a credit freeze will remain indefinitely until you request that it is lifted.
4. Set up a fraud alert. If setting up a credit freeze sounds too final, a credit fraud alert is a good alternative. Normally enacted for a period of ninety days, a fraud alert can also be used as backup when you temporarily lift your credit freeze—like when you get prequalified for a home loan to buy a house. A fraud alert on your credit report will require lenders and other creditors to verify your identity before granting a loan or credit line under your name.
Requesting a credit fraud alert from one of the three credit reporting agencies is fairly straightforward. Simply provide your proof of identity and place the request with one credit reporting company, which will then notify the other two companies so the alert is enacted. An extended fraud alert is also available for seven years.
5. Consider a free credit monitoring tool. Websites like Credit Karma offer free access to credit scores and reports from TransUnion and Equifax with weekly updates. Most credit monitoring companies offer a complimentary analysis of your credit profile and make necessary recommendations. As a note, some users report that Credit Karma monitoring scores can skew higher than actual FICO scores. But regardless, a credit monitoring tool can help you learn to recognize trends and gradually improve your credit.
6. Review your bank statements and pay bills on time. It’s easy enough to overlook, yet it’s the foundation of financial health. Checking over your bank and credit card statements each month can help you to catch the earliest signs of fraudulent activity. Making the commitment to pay bills on time can also protect your credit score from a negative hit. Your payment history makes up approximately 35% of your total credit score.
Bethany Ramos is the Creative Writer for Cornerstone Home Lending, Inc. Her work has also been featured on SheKnows.com, Time.com, Yahoo.com, Mamamia.com.au, Babble.com, and HuffingtonPost.com.
- The Washington Post, “Equifax Says 2.5 Million More May Have Been Swept Up in Massive Data Breach”
- Consumer Financial Protection Bureau, “CFPB Oversight Uncovers and Corrects Credit Reporting Problems”