No matter how careful you are, there’s always a chance that you could become a victim of identity theft. In fact, 47% of Americans experienced identity theft within the last year. Removing fraudulent activity from your credit report takes time, and being a victim of fraud could hurt your chances of receiving a mortgage or credit card.
Although you can’t wholly avoid fraud, you can take preventive measures to avoid falling victim to identity theft. Our platform has a robust collection of monitoring tools, such as financial alerts[ew2] that notify you every time there’s a transaction on one of your accounts. You can also export transactions to look for any fraud indicators.
Let’s take a closer look at the best ways to prevent fraud and protect your credit.
Don’t Use the Same Password across Multiple Websites
Let’s imagine you use a streaming service that recently suffered a data breach. Your login information is now part of a massive data dump that’s publicly available on the dark web. Scary, right? The username you used on the streaming service is your email – the same email you use across ten other platforms. But, here’s the big uh-oh: the password you used on the streaming service is the same password that you use to log in to your online banking, Facebook, and credit card accounts. You must act fast and change all your passwords (if it’s not already too late). Moreover, you should check your credit score as soon as possible. Even if a data breach doesn’t involve a financial account, hackers can access sensitive information that enables them to steal your identity.
You should never use the same password on multiple websites for this reason. If bad actors gain access to your login information for one website, they could potentially compromise various other accounts. Thankfully, various tools enable you to see if your email or phone number is in a data breach. One such tool is Have I Been Pwned. This website tells you exactly what data breaches exposed your information, and it also shares news of recent cybersecurity events.
Now, you might be wondering, “how do I remember ten different passwords?” Firstly, you should never write down your passwords on paper, whether you’re at work or home. Instead, you should use a password management tool such as 1Password or Bitwarden. These platforms serve as a secure repository to keep all your passwords in one place.
Enable Two-Factor Authentication
Two-factor authentication (2FA) is an added layer of security that protects your accounts from outside threats. Websites with 2FA typically send a code to your phone or email that you must enter before gaining access to your account. Banks and investment brokers can also send you physical tokens (often for a fee) with a 2FA code that changes every couple of seconds. A token is inarguably the most secure method because you must have it on your person. Nevertheless, any 2FA gives you additional security against cybercrime – a crime that could damage your credit report. In fact, Microsoft found that 2FA prevents 99.9% of account hacking attempts.
Get Identity Theft Insurance
If your budget allows, you should consider purchasing identity theft insurance. Although this type of coverage doesn’t curtail the threat of becoming a cybercrime victim, it gives you added peace of mind. Identity theft insurance costs approximately $20 per month, but your employer might offer it at a discount. Some of the most notable advantages of identity theft insurance include:
- Reimbursement for stolen funds
- Alerts if someone uses your SSN for a credit card or loan applications
- Credit score and ID monitoring
- Alerts if your email or phone number is part of a data breach
- Tools to quickly freeze your credit score
- Support from identity theft professionals
Review Your Credit Reports
Many financial experts recommend checking your credit report between once a month to once a quarter. Federal law requires the three major credit reporting bureaus (Equifax, Experian, and TransUnion) to give you a free copy of your credit report every 12 months. Once you’re out of free copies, you’ll have to pay $13.50 every time you request a report. Fortunately, many online banking and credit card platforms have a free tool that enables you to check your credit score. If you notice a significant drop, you should get a copy of your full credit report as soon as possible.
What Should You Do if You Spot Fraud on Your Credit Report?
There are two primary reasons to check your credit report – to monitor your overall financial health and identify if there’s any fraudulent activity on your report. If you find fraud in your credit report, you can file a dispute with each of the three major credit reporting bureaus at the below links:
Check Your Financial Accounts
It’s an excellent habit to check your finances at least once per week (once per day is even better). Unknown transactions could indicate that you’re a victim of Identity theft. And although stolen funds may not have a direct impact on your credit score, they could suggest that someone has stolen your identity.
If you have multiple accounts, checking each of them can be pretty cumbersome. You can use our platform to securely connect various banking and investment accounts using Plaid. You’ll have real-time visibility into every account with the ability to see transactions at the granular level. Best of all, you can export transactions[ew3] to Excel, making them easier to review.
Set Up Alerts
You can protect your credit score by setting up financial alerts proactively via the Chunk dashboard. Click the bell icon on the sidebar and then select the accounts you want to monitor. We’ll send an alert to your phone number and email based on the criteria you pick, such as transactions over a certain amount, overdraft fees, and large deposits.
Again, fraudulent banking activity may not directly impact your credit score. However, once fraudsters have access to your sensitive information, they can open lines of credit in your name. Be sure to enable financial alerts on our platform, so you’re always in the know.
The Bottom Line: Ways to Prevent Fraud
Cybercriminals are becoming more intelligent, and no one can completely avoid falling victim to identity theft. Fortunately, you can take extra precautions to prevent fraudsters from stealing your sensitive information and destroying your credit score. Sign up for Chunk today and enjoy our advanced tools that enable you to monitor all your financial accounts in one place.
[ew1]Search volume: 80; keyword difficulty: 43
[ew2]Search volume: 120; keyword difficulty: 36
[ew3]Search volume: 180; difficulty: 33