If you are somewhat comfortable using an online service, there are three strategies you can implement to significantly reduce the chances of being a victim of identity theft.
Two of these are free, and the one that incurs a fee is quite reasonable. The first strategy is to sign up for a LifeLock or similar service that monitors your credit, financial account openings, and unusual activity. The second is to freeze your credit with the three main credit bureaus. The last is to secure your tax returns and data with a PIN.
Let's look at each of these in a little more depth:
Monitoring Service: A credit monitoring service such as LifeLock provides you with regular updates about your credit reports. They alert you about new accounts opened in your name, changes in your credit score, or any suspicious activity related to your personal information. LifeLock even goes a step further by offering to reimburse funds stolen due to identity theft, based on the limit of your plan. Although this service incurs a fee, the peace of mind it offers makes it a worthwhile investment in your financial security.
Freeze Credit: Freezing your credit is one of the most effective ways to prevent identity thieves from opening new accounts in your name. When you freeze your credit, the three major credit bureaus - Equifax, Experian, and TransUnion, will not release your credit report without your consent. This makes it difficult for thieves to open new credit accounts under your name. Although the process can be slightly inconvenient, as you'll need to lift the freeze when you want to apply for new credit, it's a free and powerful tool against identity theft.
Get a PIN with the IRS: The IRS Identity Protection PIN (IP PIN) is a six-digit number that prevents someone else from filing a tax return using your Social Security number. The IP PIN is known only to you and the IRS and helps verify your identity when you file your electronic or paper tax return. This additional layer of protection prevents potential thieves from claiming fraudulent refunds in your name. Starting from 2021, the IRS has made the IP PIN available to all taxpayers who can verify their identities.
Implementing these strategies is a multi-layered approach to protecting yourself from identity theft. While no method is foolproof, the combination of a monitoring service, credit freeze, and securing your tax returns with a PIN significantly lowers the risk of becoming a victim. By taking these measures, you can enjoy peace of mind knowing that you've taken considerable steps to secure your financial identity.
DISCLOSURE - All written content on this article is for information purposes only. We utilized ChatGPT and other sources for this article. Opinions expressed herein are solely those of Core Wealth Consultants. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. Core Wealth Consultants, LLC a Registered Investment Advisor in the States of Florida, Indiana and Michigan. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Diversification and asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment loss.