Stories and reports of larger scale data breaches in the financial services space seem to be happening with more frequency of late. Just this past week, Global Payments, a company that processes credit card transactions, reported that as many as 1.5 million card numbers were compromised in a data breach.
Should you be concerned? What can you do to protect yourself from the adverse effects of a data breach? Will it affect your credit score if your information has been compromised in one these larger scale data breaches?
The unfortunate reality is that breach victims are at a greater risk. According to the research firm Javelin, consumers who received a breach notification last year were almost 10 times more likely to be fraud victims than those who did not. So the negative effects of having your information compromised can be very real.
In general, everyone should be aware of their personal identification and credit assets and follow a few simple guidelines to make sure there is nothing “fishy” going on with your credit and identity. These action items are especially critical if you have any indication that your information was a part of the data breach.
1. Review Bank Statments
Thoroughly review your credit card and checking account statements at least monthly to ensure the transactions listed are valid and belong to you. Far to many of us don’t take the time to do this or and instead just glance at the summary page. With online statement services, you can check these every week, day or more frequently. All lenders have easy to follow guidelines should you find suspicious information. Don’t delay to notify the lender because you will want to stop any potential fraudulent activity as soon as possible.
2. Check Your Credit
Periodically check your credit report to ensure all the information being reported on you is accurate and belongs to you. You are entitled to a minimum of one free credit report a year. You can also use Credit.com’s Free Credit Report Card to regularly check your overall credit standing. In addition, the credit reporting agencies and other companies have credit report monitoring services that will notify you when new information posts to your credit file. There is usually a fee for the notification or monitoring services and you can compare the services and their prices at Credit.com too. Access to a monitoring service for no charge may be offered to you by the company responsible for the data breach if your information has been compromised in one of these larger scale data breaches (you will receive notification of this free access by the company).
3. Take Action
The credit reporting agencies have specific data dispute processes you should follow if you find inaccurate information on your credit report. They also have special processes and services they can provide if you are a victim of fraud that protects your credit file from being accessed by unauthorized entities.
Generally speaking, it is unlikely that your credit score will be substantially impacted by a large scale data breach. If it is determined that your credit card account is negatively implicated, the lender is likely to close down the account and re-open a new one where the information (date open, current credit line, current balance, etc.) is transferred to the newly created account. The closed account would likely appear as closed or stolen on the credit report and the historical payment history would remain (any historical missed payments would continue to be reported and considered by the score).
If the data breach leads to fraud abuse, that could have a substantial impact on your credit score. The exact impact is not driven by the identification of fraud in and of itself, but by what the “fraudster” does with your identity and with the credit they open and use in your name. The score can be affected if/when they run up large credit card balances and/or miss payments. You will need to work with your lenders, the credit reporting agencies and law enforcement entities to resolve any fraud related occurrences.
While a data breach is a serious concern, you should not wait for such an event to impact you before you engage in these preventative actions. The key is to identify inappropriate use patterns as soon as possible to protect your identity and good credit.
Image: devdsp, via Flickr