Identity theft is one of the most frequent cybercrimes across the globe and leaves the victim dealing with serious and long-lasting repercussions. For the uninitiated, identity theft involves the unauthorized acquisition of personal data to establish a false identity for financial gains. Victims of identity theft could suffer for months or even years before their finances and details are in order.
In addition to losing money, the financial health and status of an individual also take a hit. The less obvious after-effect of this faceless crime is the disruption of one’s mental health, which can be seen in the form of frustration, anger, and anxiety. In extreme cases, victims of identity theft develop paranoia as well.
One of the most important things to be done after identify theft should be the freezing of your credit report. A credit freeze will prevent credit bureaus from sharing your credit report with anyone, including lenders, without your permission.
A credit freeze is a good way to mitigate the risk of any damages to your finances or identity. In case the perpetrator tries to apply for a loan or a credit card in your name, they will be unable to access your credit reports, which will lead to the rejection of the loan application. Before learning more about how to freeze your credit, let’s learn more about the various aspects of identity theft.
What is identity theft?
Identity theft means the use of your identity or personal information in order to commit a crime, mostly a financial fraud. It could mean using information from your driver’s license, PAN card, address, mobile number, etc. for wrongful economic benefit. However, in today’s highly-connected world, even assuming someone’s identity on social media is considered identity theft.
Your name and personal information can be used without your permission, and it might take you a while to realize that you are a victim. In many cases, identity theft takes place after the death of a person, too. Usually, you don’t find out about identity theft for weeks until you receive a credit card statement, messages about purchases you didn’t make, or notices in the mail about new accounts you didn’t open.
Being a victim of identity theft can be a traumatic experience and could damage your credit history and financial records while putting your personal information at risk. Unquestionably, identity theft affects the mental well-being of an individual too.
Some of the common ways your identity may be stolen are:
Nowadays, identity thieves or hackers are always looking for new ways to steal consumer information, which has given rise to various methods of committing identity theft. The most common forms are:
- Internet hacking
- Data breaches
- Credit card theft
- Malware/spam attacks
- Mobile phone theft
- Wi-Fi hacking
- Mail theft
How do identity thieves use your private details?
After extracting the required information through your email and phone, cybercriminals could conduct a range of crimes under your assumed identity. Here are the most common five ways in which stolen private details are used:
- Opening fraudulent accounts in your name.
- Using your credit card information and account numbers for making purchases.
- Filing of fraudulent taxes or stealing tax refund amounts.
- Sell your personal information on the dark web; thus, facilitating medical fraud and credit fraud with your compromised information.
- Steal your account passwords and bank PINs, as well as other passwords, to access private information as well as financial records to commit bank fraud.
Precautions to prevent identify theft
You can reduce the chances of identity theft by becoming more aware and following the below-mentioned practices:
- Don’t give out your personal information
Many times, identity thieves can pretend to be a bank official or a debt collector and convince you to give out your passwords or bank account details on the phone or by visiting your house. It is essential to be vigilant while interacting with any unknown person.
You should strictly refrain from giving out your personal information to anyone and check with the authorized bank representative before doing so. Remember, the bank never asks you to disclose your password or PIN, so anyone asking for the same should be viewed with suspicion.
- Never click on unverified email links
You should look out fraudulent emails and links, which look as if they are from some businesses or people you might know. It is important NOT to click on the link or any offer in the email. You can rollover the link with your mouse and see the destination URL to stay safe while browsing the internet.
This will help you avoid malware, phishing scams, or viruses that could try to gather your data. Most of these emails claim to offer unbelievable prizes or ask you to reset your account password.
- Shred your old financial records
It would be best if you keep shredding your old bills, credit card notices as well as other information before dumping it in the trash periodically. Nowadays, most people opt for email or text alerts for bill notifications; however, identity thieves still do dumpster-diving to gather personal information. It is important to dispose off your personal and financial documents in a way that it becomes illegible and unattainable to anyone.
- Don’t carry all your credit cards at once
You can minimise the chances of credit card theft by carrying only one or two credit cards when you go out for your everyday shopping, etc. This way, you can lessen the risk of losing your credit (and debit cards) by carrying only the ones you use on a daily basis.
- Monitor your online accounts
If you haven’t set up alerts for bank and credit card transactions, it is imperative you do so right away. Staying up-to-date with your credit card purchases and payments, as well as bank transactions, can help you in saving yourself from identity theft as well as unauthorised transactions.
Furthermore, use different passwords for different accounts to ensure that even if one of your accounts is compromised, the other remains safe. You can also use a password manager or suggested features from your smartphone to avoid becoming a victim of identity theft.
Does freezing your credit report prevent identity theft?
Freezing your credit report is one of the most effective ways to prevent identity thieves from stealing your data, especially if you have fallen prey to their tactics and shared personal information without realising. A credit freeze restricts access to your credit report to existing creditors only and can be lifted only by you.
This makes obtaining loans and credit cards and making big purchases in your name harder, even if cyber thieves have your personal information. You can now freeze your credit report for free, thereby protecting all your personal as well as financial information. A credit freeze locks down your credit, which leads to fewer chances of occurrence of financial losses or fraud in your name.
How do you freeze your credit report?
To freeze your credit report, you have to contact each of the four major consumer credit bureaus, i.e., CIBIL, Experian, Equifax and CRIF High Mark, and request for a credit freeze. You will be asked to give your name, address, date of birth, Aadhar Card details, and PAN number. Then you will be asked a few questions to verify your identity. Once you have done that, you will get a PIN that you can use to unfreeze and refreeze your credit report, as and when required.
You may want to unfreeze your credit when applying for a job in the banking or finance sector, or when taking an auto loan or a new mortgage. Similarly, you might have to unfreeze it when there is a need for a company or financial institution to review your credit history, as well. It can be easily done by using the PIN you were assigned by the credit bureaus at the time your credit report was frozen. You can again freeze your account using the same PIN if needed.
What happens when you freeze your credit report?
A credit freeze stops any of your personal data from being reported to lenders and financial institutions. Should an identity thief or fraud try to use your personal information to apply for a credit card or loan, the application would get rejected as the bank will be unable to verify your credit score.
However, as mentioned above, this process is controlled by you and you can choose to freeze your report and unfreeze your report any time you wish.
How long does it take to fix credit after identity theft?
It may take days, weeks or even months to fix credit after identity theft has taken place. The time and effort you put into it play a big part in the identity theft recovery process. The quicker an identity theft is caught and resolved, the lesser money you would lose.
Filing the initial report can be done quickly. However, it may take days to sort out your accounts and following up with banks and other agencies after doing the initial work. You will have to spend time tracking written correspondence as well as checking your credit reports. You may also have to spend hours in the bank to open new, legitimate accounts to start over.
Another factor that determines how long it will take to fix your credit is the type of theft. If you detect bogus transactions in one of your existing accounts, then it would take less than a day to clear up the identity theft. It would also cause lesser financial and legal problems.
However, if the identity theft was done to open several new accounts, get medical care or apply for a job or rent an apartment, then you may end up spending several hours over the course of six months trying to sort out the fraud. Similarly, if illegitimate transactions have been undertaken in your name and you have lost substantial sums of money, you will have to register a police complaint about the same and follow the legal process of recovery as well.
How to rebuild your credit report and score after identifying theft?
As soon as you notice signs of identity theft, it is crucial to start saving all your documents and keep a record of every phone call, message, etc. which may pertain to the situation. The second step is to contact the credit bureaus and notify lenders or creditors that they need to verify your details before issuing any credit. Next, you should shut down all fraudulent loans or credit cards that have been published in your name. Finally, the last step is compiling an identity theft report, which can be shown to banks and other financial institutions to clear your name and when closing old accounts and opening new ones.
You will also need to file a police report and make sure all the fraudulent activities and transactions are put on record. Once you have submitted the police complaint, you need to fight all fraudulent claims made in your name. Similarly, you will have to inform your business associates, or your employer, to not make any further payments in compromised accounts. Keeping track of all these processes can be cumbersome, but it is essential to minimise the fallout.
Identity theft can be a traumatic experience, but you can avoid data breaches and unauthorized access to your credit report by freezing your credit to stay safe from fraudulent activities. It pays to be vigilant and keep your personal and financial data secure. A credit freeze prevents thieves from opening new accounts in your name and saves you from a lot of financial hassles, which may otherwise take months to clear up.
A credit freeze doesn’t affect your credit score and can be undertaken quickly by contacting the credit agency via phone. It takes less than a day to process a credit freeze, and whenever you want to lift the freeze, you can give a request, and it will be done within an hour. In the case of mail, the credit freeze request is processed within three business days. Though contacting all of the credit bureaus and requesting them for the credit freeze facility might take some time, it is well worth the effort.
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