A majority of consumers are concerned about identity theft but are not taking the necessary measures to protect their identities. A 2017 Experian survey found that while 73 percent of respondents were concerned about online hacks, only 53 percent were taking steps to increase their security.
Concern over privacy and security online and offline is insufficient to
prevent identity theft. It is necessary to recognize risks and take proactive
measures. Here are several reasons to prioritize protecting your identity
paired with practical measures you can take today.
The Number of Records Exposed
Increases Every Year
Most identity theft results from data breaches, and the number of records
exposed increases every year. The Identity Theft Resource Center 2018
Data Breach Report identified 1,244 breaches in 2018, down 23% from 1,632
breaches in 2017. Even though this sounds like good news, the reported number
of records containing personally identifiable information increased 126% between
2017 and 2018 after a 389% increase between 2016 and 2017.
While it is not possible for you to prevent breaches, there are several
measures you can take to protect your sensitive personal information. Only
create accounts or shop online at trusted retailers. Breaches can also affect
physical retailers, so be aware of where you shop and which methods of purchase
you use. Keeping a close eye on financial records and credit reports can help
you spot identity theft sooner rather than later.
You should also use complex and unique passwords for each online
account to prevent a single breach from compromising multiple accounts. Use a
secure password manager to keep track of these passwords rather than enabling
devices to sign in to services automatically. You should also keep track of the
accounts you have and close any unused accounts to prevent personal information
from being needlessly exposed during a breach.
Ecommerce Is Resulting in More
Ecommerce fraud increased
by more than 30% from 2016 to 2017. Another way to gauge the increase of
this type of fraud is to look at the rise of holiday shopping fraud. According
to ACI worldwide, the number of ecommerce transactions during this time of year
was expected to increase more than 18%
in 2018, with a 14% increase in online fraud attempts. Whereas only one
transaction out of 109 was identified as a fraudulent attempt back in 2015, the
rate increased to one out of 85 in 2016, and fraud is expected to continue to
become more common.
You should monitor recent orders on online shopping services and
regularly review financial statements to identify any unauthorized purchases.
If you notice signs of fraudulent activity, contact the vendor and financial
companies. It’s a good idea to use strong, unique passwords for each online
shopping account and close any unused accounts.
Identity Theft Can Affect Every
Area of Your Life
When your identity is stolen, a thief may be able to take information
and use it to gain access to more accounts or open new accounts with your
Social Security number. Some fraud attempts may only impact certain vendor or
financial accounts, while others may have a more extensive impact on your
credit, taxes and benefits.
According to the 2018
ITRC Aftermath study, 85.% of respondents reported feeling anger and
frustration, and 69.4% reported feelings of distrust and a lack of safety. The
2017 Aftermath study found that 26% had to borrow money from family or friends,
and 22% took time off work as a result of identity theft. The physical and
psychological toll of identity theft can be life-changing.
The goal for identity theft prevention and response should be to limit
damage. Make sure that every account has complex and unique login information
and use two-factor authentication whenever possible. If you share information
on social media, it may be easier for thieves to guess password verification
answers or impersonate you in interactions with account services.
After your information becomes compromised, you should notify financial
institutions and the credit bureaus. It may be worthwhile to freeze your credit
to try to prevent new accounts from being opened or applications from being
Most Consumers Don’t Realize
Their Identity Has Been Stolen
The average amount of time before identity theft is detected is about three
months, according to the 2017 ITRC Aftermath Study. Approximately 16% of
victims did not discover that their information was compromised for three
years. Persistent monitoring of financial accounts, credit reports, and records
maintained by other data brokers can shorten the length of time between
incidents of fraud and reporting.
The sooner you realize that identity theft has occurred, the more
measures you can take to limit the harm that can be done. If fraud takes place
on a particular service, you should report it to the service within hours if
possible. Notify financial accounts and consider placing a fraud alert or
freeze on credit reports. The Federal Trade Commission recommends that victims
file complaints through an online
identity theft database. Contact at least one of the three major credit
bureaus, which will then be obligated to notify the other two bureaus to ask
them to place alerts on your file.
Your Online Presence May
Compromise Your Privacy and Security
Many individuals do not realize that the information posted on social
media may compromise their personal privacy and security. Regularly check your
privacy settings and carefully review updated terms of service agreements. You
should also be wary of accepting friend requests from unknown users on social
media, where thieves may access information that could make your security
questions easier to answer. This information may also enable a thief to craft
more personalized spear-phishing
emails or messages. The increased visibility that comes with being a popular
social-media user can increase your risk of identity theft.
These are a few reasons why consumers should take immediate action to
protect their identities. Proactive, preventative measures are easier to
implement than protective measures after personal information has been
compromised. If your identity has been stolen, Lexington Law Firm excels at handling
credit bureau challenges to help you
restore your credit. Contact us today
for a free personalized credit consultation to see how we can help you.
Does Getting Joint Credit Cards Have an Impact on Both Spouses’ Credit?
While marriage can help you improve your financial situation, it does not automatically mean that you and your spouse will share a credit report. Your credit records will remain separate, and any joint accounts or joint loans that you open will appear on both of your reports. While this can be advantageous, it’s critical to remember that joint account activity can effect both of your credit scores positively or negatively, just as separate accounts do.
Users Who Are Authorized
An authorized user is a user who has been added to an existing credit account and has been granted the authority to make purchases. Authorized users are typically issued a card bearing their name, and any purchases made by them will appear on your statement. The primary distinction between an authorized user and a shared account owner is that the account’s original owner is solely responsible for debt repayment. Authorized users, on the other hand, can always opt-out of their authorized status, although the principal joint account owner cannot.
If your credit score is better than your spouse’s as an authorized user, he or she may benefit from a credit score raise upon account addition. This is contingent upon your creditor notifying the credit bureaus of permitted user activity. If your lender does report authorized users, the activity on your account may have an effect on both you and your spouse. However, some lenders report only positive authorized user information, which means that late payment or poor usage may not have a negative effect on someone else’s credit. Consult your lender to determine how authorized users on your account are treated.
Joint Credit Cards Have an Impact on Your Credit Score
Opening a joint credit account or obtaining joint financing binds both of you legally to the debt’s repayment. This is critical to remember if you divorce or separate and your spouse refuses to make payments, even if previously agreed upon. It makes no difference who is “responsible,” the shared duty will result in both partners’ credit histories being badly impacted by late payments. Regardless of changes in relationship status or divorce order, the creditor considers both parties to be liable for the debt until the account is paid in full.
Whether you’re happily married or divorced, you and your spouse may decide to open separate credit accounts. Most creditors will enable you to transfer an account that was previously joint to one of your names if both of you agree. However, if there is a debt on the account, your lender may refuse to remove your spouse’s name unless you can qualify for the same credit on your own. Depending on your financial status, qualifying for financing and credit on a single income may be tough.
While creating the majority of your accounts jointly with your spouse may make it easier to obtain financing (two salaries are preferable to one), reestablishing credit independently following a divorce or separation is not always straightforward. To make matters worse, your spouse may wind up causing significant damage to your credit rating following the separation, either intentionally or through irresponsibility – making the financial situation much more difficult.
Before you rush in and open accounts with your spouse, take some time to discuss the shared responsibility of these accounts and what you and your husband would do in the event of a worst-case situation. These types of financial discussions can be difficult, especially when you rely on items lasting a long time, but a mutual understanding and respect for each other’s credit can go a long way toward keeping your score when sharing an account.
Should you pay down debt or save for retirement?
While establishing a comprehensive, workable budget is undeniably one of the most important factors in maintaining a healthy financial life, it can also be one of the most difficult. For those who are struggling with personal debt, building a budget can be particularly challenging. When the money coming in has to stretch like a contortionist to cover expenses, it can be hard to determine where to focus — and where to trim.
Sometimes, the battle of the budget can come down to a choice between dealing with the present — and thinking about the future. When your income is running out of stretch, do you pay off your existing debt, or do you start saving for retirement? At the end of the day, the solution to that particular dilemma depends on the type of debt you have and how far you are from retiring.
If you have high-interest debt, pay it down
When considering how to allocate your budget, it’s important to understand the different kinds of debt you may have. Consumer debt can be categorized into two basic types: low-interest debt and high-interest debt, each with its own impact on your credit (and your budget).
In general, low-interest debt consists of long-term or secured loans that carry a single-digit interest rate, such as a mortgage or auto loan. Though no debt is the only real form of good debt, low-interest debt can be useful to carry. For instance, purchasing a home with a low-interest mortgage can actually save you money on housing costs if you do your homework and buy a house well within your price range.
High-interest debt, on the other hand, typically has a hefty double-digit interest rate and shorter loan terms, such as that of a credit card or payday loan. High-interest debt is the most expensive kind of debt to carry from month to month and should always be priority number one when building a budget.
To illustrate why you should focus on high-interest debt above everything else, consider a credit card carrying the average 19% APR and a $10,000 balance. If the balance goes unpaid, that high-interest credit card debt will cost $1,900 a year in interest payments alone. Now, compare that to the stock market’s average annual return of 7%, and it becomes clear that you’ll see significantly more bang for your buck by putting any extra funds into your high-interest debt instead of an investment account.
If you are having trouble paying off your high-interest debt, there may be some steps you can take to make it more manageable. For example, transferring your credit card balances from high-interest cards to ones offering an introductory 0% APR can eliminate interest payments for 12 months or more. While many of the best balance transfer cards won’t charge you an annual fee, they may charge a balance transfer fee, so do your research. You’ll also want to make sure you have a plan to pay off the new card before your introductory period ends.
Most balance transfer offers will require you to have at least fair credit, so if your credit score needs some work, you may not qualify. In this case, refinancing your high-interest debt with a personal loan that has a lower interest rate may be your best bet. Make sure to compare all of the top bad credit loans to find the best interest rate and loan terms.
If you’re nearing retirement, start to save
The closer you get to retirement age, the more important it becomes to ensure you have adequate retirement savings — and the more pressure you may feel to invest every spare penny into your retirement fund. No matter your age, however, paying off your high-interest debt should always remain the priority, as it will always provide the best rate of return (as well as likely provide a credit score boost).
Indeed, no matter how tempting it becomes, you should avoid reallocating money you’ve dedicated to paying off high-interest debt to save for retirement. Instead, the focus should be on re-evaluating your budget to find any additional savings you can. To be successful, you will need to make a strong distinction between want and need — and, perhaps, make some tough lifestyle choices.
Though simply eliminating your daily coffee drink won’t magically provide a solid retirement fund, saving a few bucks by homebrewing while also eliminating a pricey cable bill in favor of an inexpensive streaming service — or, better yet, free library rentals — can add up to big savings over the course of the year. The ideal strategy will involve overhauling every aspect of your lifestyle, combining both large and small cuts to develop a lean budget structured around your long-term goals.
Of course, while you should never allocate debt money to your retirement savings, the reverse is also true. It is almost always a horrible idea to remove money from your retirement account before you hit retirement age — for any reason. Withdrawing early means you will be stuck paying hefty fees for withdrawing money early and, depending on the type of account, you may also have to pay significant taxes.
Aim for both goals by improving income
As you take the necessary steps to pay off debt and save for retirement, you may have already stretched the budget so thin it’s practically transparent. In this case, it is time to consider ways to improve your overall income. Increasing the amount you have coming in not only provides extra savings to put toward your retirement, but may also speed up your journey to becoming debt-free.
The easiest solution may be to look for ways to increase your income through your current job; think about taking on additional shifts or overtime hours to earn some extra cash. Depending on your position — and the time you’ve been with the company — consider asking for a pay raise or promotion, as well.
If you do not have options to make more money at your day job, it may be time to find a second job. Look for opportunities that provide flexible schedules that will accommodate your regular job; many work-from-home positions, for example, can easily fit into most work schedules. Doing neighborhood odd jobs, such as babysitting and dog walking, may also provide a solid income boost without interfering with your existing job.
For some, the need to pay off debt and improve retirement savings can be more than just a source of stress — but a hidden opportunity to begin a new career adventure. Instead of being weighed down by yet more work, use the desire to better your budget as a reason to explore the profit potential of a passion or hobby. Starting a small online store, part-time consulting service, or other small business can be a great way to improve your income and your overall happiness.
While it may sound intimidating, starting a side business can be as simple as putting together a professional looking website and doing a little marketing legwork to spread the word. And no, building a website isn’t as scary — or expensive — as it seems, either. A number of the top website builders now offer simple drag-and-drop interfaces perfect for putting together a professional-looking web page in minutes (without breaking the bank).
How does a loan default affect my credit?
Nobody takes out a loan expecting to default on it. Despite their best intentions, people sometimes find themselves struggling to pay off their loans. These types of struggles happen for many reasons, including job loss, significant debt, or a medical or personal crisis.
Making late payments or having a loan fall into default can add pressure to other personal struggles. Before finding yourself in a desperate situation, understanding how a loan default can impact your credit is necessary to avoid negative consequences.
30 days late
Missing one payment can further lower your credit score. If you can pay the past due amount plus applicable late fees, you may be able to mitigate the damage to your credit, if you make all other payments as expected.
The trouble starts when you (1) miss a payment, (2) do not pay it at all, and (3) continue to miss subsequent payments. If those actions happen, the loan falls into default.
More than 30 days late
Payments that are more than 30 days past due can trigger increasingly serious consequences:
- The loan default may appear on your credit reports. It will likely lower your credit score, which most creditors and lenders use to review credit applications.
- You may receive phone calls and letters from creditors demanding payment.
- If you still do not pay, the account could be sent to collections. The debt collector seeks payment from you, sometimes using aggressive measures.
Then, the collection account can remain on your credit report for up to seven years. This action can damage your creditworthiness for future loan or credit card applications. Also, it may be a deciding factor when obtaining basic necessities, such as utilities or a mobile phone.
Other ways a default can hurt you
Hurting your credit score is reason enough to avoid a loan default. Some of the other actions creditors can take to collect payment or claim collateral are also quite serious:
- If you default on a car loan, the creditor can repossess your car.
- If you default on a mortgage, you could be forced to foreclose on your home.
- In some cases, you could be sued for payment and have a court judgment entered against you.
- You could face bankruptcy.
Any of these additional consequences can plague your credit score for years and hinder your efforts to secure your financial future.
How to avoid a loan default
Your options to avoid a loan default depend upon the type of loan you have and the nature of your personal circumstances. For example:
- For student loans, research deferment or forbearance options. Both options permit you to temporarily stop making payments or pay a lesser amount per month.
- For a mortgage, ask the lender if a loan modification is available. Changing the loan from an adjustable rate to a fixed rate, or extend the life of the loan so your monthly payments are smaller.
Generally, you can avoid a loan default by exercising common sense: buy only what you need and can afford, keep a steady job that earns enough income to cover your expenses, and keep the rest of your debts low.
Clean up your credit
The hard reality is that defaulting on a loan is unpleasant. It can negatively affect your credit profile for years. Through patience and perseverance, you can repair the damage to your credit and improve your standing over time.
Consulting with a credit repair law firm can help you address these issues and get your credit back on track. At Lexington Law, we offer a free credit report summary and consultation. Call us today at 1-855-255-0139.
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