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THE PROBLEM WITH CARING ABOUT A CREDIT SCORE

September 11, 2017

 

So last week everyone lost it when they found out that Equifax had been hacked. It happened a couple of months ago, but they just decided to tell the rest of us. This was not a small hack, but it looks like over 140 MILLION people were affected. Important information obtained in the hack: addresses, birthdates, credit card numbers, names, and worst of all social security numbers. Many people on social media found humor in the situation and asked the hackers to erase their student loans.

 

Unfortunately this situation is a lot more serious than a joke. With this information hackers can sell the information and that can lead to a lot of other problems. People can open up accounts in your name and put you in massive amounts of debt without your knowledge. You may not know until a debt collector calls. In some cases hackers can get access to your bank account. This hack brought something to light. That we as a country have to much stock in credit scores and these credit bureaus. Over the years we have given them more and more power so when something like this happens we completely freak out. We have let them sell us on the idea that your financial life is crap if you don't have a high credit score. They are even teaching this nonsense to middle school kids now.

 

What happens when you live your life according to a number? Then you end up backing yourself into a corner and can not utilize the possible options that are out there to help in this situation. I have not borrowed money since 2007 and so I don't care what my credit score is and when this news broke I really just shrugged my shoulders. There are two precautions that need to be taken immediately for everyone and I want to share them so that you can get it done this week. This will give you some protection against the hackers.

 

Freeze on your credit report

 

When you put a freeze on your credit report it is to prevent new credit being opened in your name. You will need to contact each credit bureau and put the freeze on: Equifax, TransUnion, and Experian. You won't be able to get new credit(aka go into new debt) while the freeze is on and that is where most people will get in trouble. If you are not in a secure financial position and will need credit in the future then you can't freeze your credit. If you can't freeze it then you leave yourself open for fraudulent activity. In other words this score has left you in a lose-lose situation.

 

Fraud alerts

 

You can put a fraud alert on your credit report. When this alert is on your report at the credit bureaus then lenders have to take extra steps to prove identity of the person asking for the new credit(aka new debt). It does not keep people from opening new debt in your name, but it does make it harder. You can put a ninety day alert or an extended alert and that can last seven years. This is an option that will also make it hard for you to get new debt all in the name of protection and a score.

 

Pay close attention to offers that have appeared all of a sudden. First of all Equifax the one who was not secured enough to keep the hackers out is offering credit monitoring. HA! Wait it gets better! They will offer it for free the first year and if you don't cancel it they will charge you a monthly fee until it is cancelled! Wait! It gets better! If you choose the monitoring you waive your right to join a class action lawsuit against them! There has been pressure on them to eliminate that clause so we will see what happens with that. Last, but not least the company Life Lock is popping up willing to help you in your time of need. The problem is with that is the Federal Trade Commission has sued them multiple time for deceitful advertising around their credit monitoring services. They charge a ridiculous fee for actions you can take yourself for free.

 

This entire situation shows what happens when you give something to much power. We know that there are 50 million people with 0 credit scores and that there are ways to buy a car and a house with a 0 credit score. Also you can do anything with a debit card including traveling around the world. This MASSIVE FAILURE on Equifax's part should teach us all a very valuable lesson. If you have not moved your financial life to a place where a credit score doesn't matter you need to focus only on that going forward until it is done!

 

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