Real Estate News  

How The Equifax Hack Affects Homebuyers And How You Can Protect Yourself


Written By: Jaymi Naciri
Wednesday, September 27, 2017

Half of the country is freaking out. Thats about how many people are potentially affected by the unprecedented Equifax hack. If youre the average person whos afraid of having your data stolen - and by data, we mean your name, Social Security number, birth date, addresses, credit card numbers, and drivers license number that were reportedly involved in this breach - you may have already taken some steps to limit the damage. But what if youre in the process of buying a home or are getting ready to do so? How does this hack affect you, and what can you do to make sure you are protected?

Potential fallout for homebuyers

"Take this scenario: Say your Equifax file was looted but youve done little or nothing to detect fraudulent activity on one or more of your credit accounts. You sign a contract to buy a house, and you apply for a mortgage. The lender pulls your credit and confronts you with shocking news: Your FICO credit score is too low for you to qualify for the loan because youve been running up too much debt on one or more accounts. Your lsquo;utilization ratio on your available credit is too high, and that has depressed your score," said the Washington Post.

"Or theres a newly established account in your files that has put you deep in debt, even though you had nothing to do with it. It turns out that financial thieves have been racking up thousands of dollars in debts at your expense, and now - smack in the middle of a major lifetime investment - youre stuck with having to get the file corrected, which takes time and can be a pain. In the meantime, what happens to your purchase contract? Will the sellers bear with you, essentially putting off the transaction indefinitely and possibly blowing up their own plans to move into another house on a specific date? It could all get really messy."

Those who are already in escrow could also be derailed when the lender runs your credit before the loan closes and discovers fraudulent new accounts or charges that raise the debt-to-income ratio beyond what is allowed. "At the very least, whatever rate locks you had could be blown as you scramble to get your files corrected," they said. "Or your entire loan transaction could be jeopardized if the process takes too long."

Steps to take now

Have you still not checked to see if you were potentially impacted by the hack that affected as many as 143 million people? Not having dealt directly with Equifax doesnt guarantee your safety. "You may have never used Equifax yourself, or even heard of it," said CNN. "Either way, the credit reporting agency could still havenbsp;a lotnbsp;of your personal information. To find out if your data was compromised by the hack, gonbsp;here."

Keep in mind that youll have to enter your last name and the last six numbers of your Social Security number to check. Regardless of whether or not they believe you were impacted, youll be prompted to enroll in their TrustID Premier credit monitoring service, which will be free for a year. Despite earlier concerns, "Equifax has confirmed that signing up for TrustID Premier willnbsp;notnbsp;prevent you from joining a >

Armed with this information, you can go about taking further steps to protect your credit and prevent thieves from stealing your identity. Pull your credit reports for free once a year at www.annualcreditreport.com. Look them over carefully to make sure there are not any fraudulent accounts and/or charges. If you see anything, get on the phone with the creditor right away and start the dispute process. If youre in the process of applying for a home loan or are under contract, youll also want to call your lender immediately to alert them to what you found.

To freeze or not to freeze

There has been quite a bit of discussion about credit freezes since news of the breach broke, with some consumers concerned that "turning off" their credit could potentially damage their score or negatively impact them in some other way, especially during the homebuying process. The fact is that a credit freeze is "the most extreme method, but its also the most effective" at preventing your information from being stolen and used to open new accounts, credit expert Barry Paperno, who blogs at Speaking of Credit, told NerdWallet. And, it can be turned on and off as needed for, say, a mortgage application or credit re-check before a closing.

"There are no downsides to this: You can still use your credit cards with the freezes on," said Realtor.com. "But no one will be able to check credit scores and personal information without yournbsp;permissionmdash;so no bad apples can open up fraudulent new cards or getnbsp;loans under yournbsp;name. And younbsp;can undo the freezes at any time - typically for a smallnbsp;fee."

That fee varies depending on the state, and Equifax has said it will offer free freezes for 30 days, but the need for freezing will extend long after that is over. "Because a freeze can prevent fraud, its better than a credit monitoring service, which only alerts you that fraud might havenbsp;happened," said NerdWallet.nbsp;"Its the difference between using a deadbolt to keep thieves out rather than a security camera to catch them after the fact."

You can easily request a freeze online for the three credit unions: Equifax, Experian, and TransUnion.

Fraud alerts

"If you dont want to lock out all creditors - perhaps youre in the middle of mortgage shopping or refinancing - you can place a 90-day fraud alert on your credit," they added. "Thisnbsp;tells potential creditors to verify your identity before issuing credit in your name." A fraud alert is a good idea whether or not you freeze your credit. In this day and age, when hacks are more frequent and more damaging to more people, ongoing monitoring just makes sense.

"The biggest fears of identity theft "center around identity theft on an epic scale. It isnt tough to conjure upnbsp;worst-case scenarios," said Realtor.com. "Think about it: Bad guys with all of someones information could, at least theoretically,nbsp;trynbsp;to buy a home under that personsnbsp;name. Its more likely, though, they would use those stolen credit card numbers - or use SSNsnbsp;to open up new credit cards - and rack up lots ofnbsp;debt in that unsuspecting victims name. And that damage could make it much harder for someone to qualify for a mortgage or refinance annbsp;existing mortgage."

Consumers have largely been turning to ID theft protection company LifeLock, who the Los Angeles Times said could be "one of the big winners from the big data breach suffered by Equifax." Not surprisingly, the firm has upped its advertising outreach in the wake of the breach. The result: "An executive of Symantec, LifeLocks parent company, told Bloomberg that since the Equifax breach was reported,nbsp;LifeLocks Web traffic has increased sixfoldnbsp;and enrollments per hour are running 10 times ahead of the pre-Equifax era."

But, theres a rub: "Heres what LifeLock isnt advertising so widely: When you buy its protection, youre signing up for credit reporting and monitoring services provided by, yes,nbsp;Equifax. LifeLock signednbsp;a four-year contract with Equifaxnbsp;in December 2015," and the >

If any or all of that makes you queasy, there are alternatives to LifeLock you may want to consider.



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