DEAR MR. MYERS: I am planning to buy my first home this spring, but I recently learned that my credit file was among those that were hacked in the attack on Equifax’s computer system last year. I ordered a copy of my credit report last week and there was no suspicious activity on it, but I want to keep that information away from identity thieves because I expect to be filing a mortgage-loan application soon. What’s the best way to do this?
ANSWER: Most credit experts say that the attack on Equifax’s computer files in 2017 was the largest in history. From mid-May through July, the company admits, the files of as many as 143 million people – about half of the nation’s population – were breached by computer-hacking thieves. Information that was stolen included Social Security numbers, birthdates, home addresses and, in some cases, driver’s license and credit card numbers.
You already have taken the first two steps to protect your credit history by calling Equifax’s special telephone hotline (866-447-7559) to see if your credit file was compromised and then to order a free copy of your credit report. Federal law allows all consumers to get a free copy of their report from each of the nation’s three big credit bureaus every 12 months by visiting the government-approved website annualcreditreport.com or by calling the agency at 877-322-8228.
Now, your next step is to decide whether to place either a “fraud alert” or a full-blown “credit freeze” on your credit file. There are some key differences between the two.
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A fraud alert is a temporary, 90-day notation that the credit bureau will place on your file. It’s basically a “red flag” for any potential creditor that accesses your credit report, warning that you believe you are a potential victim of identity theft. The bureau will then take some extra steps, such as calling you or writing to you to validate your identity before approving a loan or opening any other type of new account.
A credit freeze, sometimes called a “security freeze” or “file freeze,” can give you more protection. That’s because it completely blocks a mortgage lender or other potential creditor from reviewing your credit file.
Though filing a credit freeze may give you more protection today, it can cause problems later. For example, if you freeze your credit file now, you will then have to “unfreeze” it when you apply for a mortgage or other credit later. It may take a few days to thaw it, which could delay the application process and, perhaps, even void the purchase of a home or add financial penalties if you can’t arrange the needed financing before the date that the sale is set to close.
It sometimes costs $10 or more to un-freeze a credit file. That doesn’t seem like much, but it adds up if you choose to freeze your account to protect against identity thieves, thaw it each time you apply for a new loan or other credit, and then put your file back on ice until it’s needed to be accessed again.
REAL ESTATE TRIVIA: A new survey by the National Association of Realtors finds that 51 percent of all renters expect an increase in their monthly housing payments this year. About 42 percent said that they will re-sign their lease, while only 15 percent said they would consider purchasing a home.
DEAR MR. MYERS: My husband and I love those hilarious television commercials for Farmers Insurance, like the one where the dogs flood a home while the owners are away, and the one when a moose gets tangled in a swing set and then trashes a nearby motor home. But are they based on actual events?
ANSWER: Yes, says a Farmers marketing executive, though the TV spots are embellished a bit to make the stories more entertaining.
The two ads that you mentioned are part of a long-running marketing campaign known as the “Farmers Hall of Claims.” You can find all the ads, as well as background on each claim and entertaining interviews with the agents who handled them, at farmers.com/hall-of-claims.
DEAR MR. MYERS: If I create the type of living trust that you sometimes recommend, can I change the trust later to add new items to the trust or to change my beneficiaries?
ANSWER: Yes. An important but often-overlooked advantage of creating an inexpensive living trust rather than a traditional will is that a trust typically is easier to amend. You can put new assets into the trust quickly, take an asset out, change your heirs or even designate someone new to distribute your assets after you pass away.
A home and most other property that’s held inside a trust can also be mortgaged, refinanced, sold or given away just as they could if you didn’t have a trust at all.
David W. Myers’ column is distributed by Cowles Syndicate Inc.