Every time we’re online, there’s a risk of our personal information being exposed through data breaches. These breaches can get pretty nasty, hitting you where it hurts most. Merrill Chandler gets into how these more risky data breaches happen and how you can protect yourself, especially in relation to your credit application. On its own, applying for credit can be a hard enough process. Imagine compounding that difficulty with someone pretending to be you chipping away at your chances of approval? Get smart and get ready to protect yourself from these data breaches today!
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How Scared Do You Really Need to Be?
In this episode, we’re going to be talking about scare tactics and data breaches. I could address this and bring things up into real-time until I found one of my Facebook Lives that I did back at the Equifax data breach. When I reviewed it, I’m like, “How do you make perfection better?” We’re going to drop right into that presentation. I go down what the problem is with all of the hullabaloos that are going on about that or any other data breach. Should we be scared? We’re going to cover exactly that. We were in the middle of getting it out to our clients and our funding hacker community as soon as we learned about the data breach. Enjoy what I have to say about data breaches because it may not be what you think it is or how bad you’ve been led to believe. Enjoy the episode.
I wanted to address the issues that are going on with the Equifax data breach. We’re going to go over what some of the problems are and then we’re going to talk about a couple of solutions. The first thing is the process of stealing someone’s identity is not effortless. Identity theft is the most invasive when you apply for credit. Owning the data is not of paramount importance. It’s what they do to use it to apply on your behalf. We want to keep those separate. Just the theft of something doesn’t make it harmful. It’s the use of it in filing applications for lenders. In order for somebody to submit an application, they need your name.
For those of us who are clients, if they use your full middle name instead of your PCID name, it will trigger a yellow flag because it’s different than what’s on file. We have a way of triggering yellow flags if they use some different version of your name. Second of all, if they use a different address or a different form of the address other than your perfect PCID address, we’ll get another yellow flag. Remember that an accumulation of yellow flags will create a red flag and it gets thrown out. Secondly, they will use your Social Security number. If they’re going into breach data, they’re going to look for your Social Security number and your date of birth. They know how to search for this and they’re going to look for that field if they’re going to hack a database.
There’s not much we can do about that because your PCID has your traditional date of birth and Social Security number. What’s most important though is in every application they go to file, they have to put in your income. This is where we have a chance to get it thrown out. Credit bureaus do not receive from creditors your income and it’s illegal for them to post or keep your income as part of their credit bureau records, but lenders and merchants use backchannel underwriting software to share your submissions of what your income is on the last application you’ve done. By them sharing this information as part of their underwriting software, if the ID thieves use a version of your income or if they submit what your income is, it’s above or below by I’m guessing plus or minus 20%.Identity theft is the most invasive when you apply for credit. Click To Tweet
My intuition has gotten us long ways when it comes to optimization. If it’s plus or minus 20%, there’s a chance that it’s going to be rejected because that is too much. Part of their fraud prevention software is to keep a consistent version of your income and then report that under your name, Social Security number, date of birth to any of the other creditors. Equifax’s breach doesn’t harm or they haven’t captured that income data. There’s a chance of any application being done in your name. If in the unlikely event that something is done in your name, they’ve got to be spot on with your income. There is a safety valve for us there.
As far as it goes to our action items, I’ve certain things I want to cover. One, if you believe in belts and suspenders and you want to have extra protection, Equifax is offering a trusted ID premiere service for a year for free. You can use that and look for notifications. However, you’re subscribed to MyFICO.com. MyFICO has way more powerful software than many that are offered out in the marketplace. Number one, MyFICO has the opportunity to be able to see whether or not you’re on a blacklist. There are millions and millions of people on these blacklists. Being on the blacklist does not mean that you can do something about it. What it does is it raises our awareness so that we can watch the FICO alerts more attentively. Being on a blacklist does not mean you’re next in line to have your identity. It’s already been stolen. It’s whether or not they’re going to do an application in your name.
Number two, you want to watch for inquiries through the MyFICO software. Anytime you’re going to get a change of address notice, watch for those. You’re going to get an inquiry notice. Those are the things you want to watch for activity that you have not done. If that occurs, if an inquiry or an address change hits your MyFICO alerts that you did not do, then you need to contact the lender or merchant immediately. Find out whether or not the account was approved and if it was approved, then you need to have them close the account and then demand that they remove the account.
Remember, it changes your average age if you have a zero-month account in your revolving account’s portfolio. Whether or not the account was removed, you need to demand that they remove the inquiry because that’s going to stay on your credit report for 24 months and count against your score for twelve months and against underwriting for 24. You want to make sure you do that. If you haven’t already done so, part of your subscription to MyFICO includes the transaction service. They’ll watch and monitor transactions so that if you run one of the credit cards or checking accounts that you’ve put on their system, if you’ve done a transaction, it’ll show up on a text or an email. If you haven’t done it, you can know that somebody is tapping on your checking account, credit card, debit card.The process of stealing someone's identity is not effortless. Click To Tweet
Use the transaction service that comes automatically with your MyFICO account. If you have any questions about this process, make sure that you’ve talked to your advisor team, but they’re going to give you these exact same solutions. Every once in a while, to prove the ID thieves steal an account and they have your information, they may submit false tax returns in your name so that they can then use that as evidence to open up larger lines of credit. The way you check on that is that FICO will usually do a new address because they want those tax returns to come to them. You’ll get a new address on your FICO alerts. If that occurs, then we want to make sure that you follow up with the IRS and show them that they have the wrong identity and somebody is filing false returns in your name.
You want to call the IRS, ask which address they have there, confirm that your home address or business address is the one that should be there and make sure that they disavowed and deleted any of that information. The final thing we want to discuss is the use of credit freezes. If you’re in the optimization process and you still have to open up some new accounts, your optimization plan includes the opening of new accounts, any new mortgages coming up, car loans, business lines of credit, anything like that. If you freeze your account, then you have to manually approve every single one of these credit transactions. If you’re mostly done or partially done and there’s not much left to open, you’re just optimizing. When you put a freeze on it, it’s going to take your credit profiles off of MyFICO’s three-bureau report automatically.
As many of you have learned, a credit freeze goes on there and the credit bureaus no longer give the data to MyFICO to give us our quarterly updates. There is a risk there. Talk to your credit advisors to make sure what is best for you given your particular state. Remember, there are hundreds of thousands if not millions and millions of data set that we call identities that are out there in the world on blacklists and in the hands of nefarious persons. They cannot do identity theft on even a small percentage of them because of the amount of work that it takes to create this and the fraud prevention software that is done on the underwriting side as well as the credit bureau side. I’m not trying to minimize the threat; I am trying to be realistic about the likelihood of it occurring. If it occurs, I’ve given you some great points here and we’ll be sending out an email to all of our clients that captures this. We’re going to get this out as soon as we possibly could. I want you to protect yourself as much as possible.