You’ve probably heard about the massive data breach that recently hit the credit bureau Equifax — but if the news just kind of went through one ear and out the other, it’s time to listen up!
I get that all the data hacking can get confusing — with so many breaches and hacks happening all over the place these days — it’s nearly impossible to keep up or know what you’re supposed to do about it. So a lot of people have simply just stopped paying attention. BAD IDEA!
Why? Because this one single hack is worse than any other breach we’ve ever seen.
If you aren’t quite sure what happened, why it’s so bad and what you can do, you aren’t alone. But you need to know, so here’s the scoop.
The hack that hit Equifax, one of the nation’s three main credit reporting agencies, is being called the worst data breach in modern American history — and with very good reason.
The extensive personal and sensitive data stolen from 143 million Americans (which is about half the U.S. adult population) was more than enough for criminals to destroy people’s financial lives and continue to cause Americans financial damage and trouble for the rest of their lives.
When crooks get their hands on this information, or even just part of it, they can open new bank accounts, credit cards and other new lines of credit in your name — among other things — and in the process, destroy your credit and your financial life for years or even decades.
Your credit is at the center of your entire financial life. Any damage to it can cause you some big problems both now and down the road.
Your credit reports track payments and other information for every loan, credit card, retail card and any other line of credit or bill you have, or have had, in the past. Your report contains pretty much all the details of all your accounts, including limits, balances, when you paid on time, when you paid late, when you applied for the credit and more. It even contains information on other bills you may have never paid or paid late, including student loans, medical bills, utility bills, cell phone/cable bills etc.
When you want to open a new credit card, get a car loan, get a mortgage, your credit report is pulled by the lender so they can determine if they want to give you the line of credit or loan, and how much. The report is used to set your interest rates on these loans — and if you have bad credit, you’ll pay higher interest rates.
This is why maintaining good credit and a good credit score is crucial — especially when it comes time to buy a house or car, or refinance a loan, like student loans.
So when a criminal starts wreaking havoc on your credit, it could mess up a lot of your short-term and long-term money plans.
Millennials have a lot more financial milestones ahead of them, compared to, say, someone in their 50s. And in order to reach these milestones — and make big purchases like a car or house — it’s going to require good credit.
Building a good credit history isn’t easy, and it takes time. The damage caused by just one missed payment can actually take years to repair. So when a young person is hit by identity theft, the damage can follow them around for years.
When your credit history spans 30 or 40 years, it can offset a few dings and damage that occur over that time.
But since millennials haven’t had much time to build up a long history of credit accounts and on-time payments, even a few negative marks — like a criminal attempting to a few new lines of credit or a credit card in your name — can do major damage, which then causes your credit score to drop.
And fixing that damage can take years because you have to build back up a good credit history of on-time payments and other things that can take a long time before they have a positive impact on your report and credit score.
Equifax has set up a specific website to help consumers find out if their information has been exposed. The company says it is also sending notices in the mail to consumers whose credit card numbers and/or dispute documents were exposed.
*Important note: Equifax is also offering consumers the option to sign up for credit file monitoring and identity theft protection. DO NOT SIGN UP FOR THESE SERVICES.
Instead, whether or not Equifax says your information was stolen, you need to take the following two steps to protect yourself, your money and your financial future!
1. Sign up for Credit Karma’s free credit monitoring: Go to CreditKarma.com to sign up for a free account and you’ll get access to free credit monitoring. If they notice any suspicious activity, you’ll get an alert. Plus, Credit Karma gives you free access to your credit scores and reports, as well as tips on what factors are impacting your credit.
2. Freeze your credit with all three main credit bureaus: By freezing your credit files, you can prevent criminals from using your information to wreak havoc on your financial life. Even if your info was not exposed by the Equifax hack, this is the best way to protect your identity and your money.
Check out our Credit Freeze Guide to learn how to freeze your credit with each main agency.
Keeping up with your credit reports and score is crucial moving forward. Once you sign up for Credit Karma, you check for suspicious activity and get updates on factors impacting your credit.
Another thing you need to do is monitor your financial accounts — DAILY! This will allow you to spot any errors or potential fraud early, so you can report it to the lender or bank immediately!
Taking steps now to protect yourself is crucial, because while criminals may have your information, they may not decide to use it for years. So by freezing your credit and monitoring your financial accounts, you can minimize any potential damage that could come along down the road.
Equifax breach: What if I plan to get a loan, credit card or mortgage?