Locking Down Your Credit: Checking/Banking Account Screening and Freezing

Has this ever happened to you? I drove to the store the other day, but before I left, I carefully locked my front door. Can’t be too careful, right? Anyway, when I came home, unlocked the front door and put the groceries down on the counter, I looked up to see I had left the back-sliding door wide open. Luckily, no bad guys had figured it out, but I felt pretty silly.

Unfortunately, the vast majority of the general public are doing the same thing on a continuous basis when it comes to identity theft. Now, I am going to assume that most of you heard about the Equifax breech a couple of years ago. Since then, recent federal laws have made it free and easy to freeze and unfreeze your credit files. This makes it almost impossible for identity thieves to open up new credit accounts in your name. If you have not heard of the credit freeze procedure, visit the Consumer Financial Protection Bureau’s website to learn more.

Credit bureau freezes will lock the front door, but let’s talk about the back door that is still wide open for millions of people. First, a little background on the Equifax credit breach announced in September 2017.

Almost half of the American public, 148 million people, had their credit files stolen. As if the sheer numbers weren’t enough, the types of personal identifying information made this one of the worst breaches in history. Not only credit card numbers were stolen but also names, addresses, phone numbers, dates of birth, Social Security numbers and driver’s license numbers were taken. They basically got everything except for your junior year math grades.

I have had a lot of people say to me “Well, if it happened that long ago and nothing has happened to me, I probably have nothing to worry about.”

To which I respond “Nope. Wrong. False. Error.”

That is because there is a whole distribution system for stolen data. The folks who stole the 148 million files are probably still in the process of wholesaling batches to the regional distributors. The regional distributors are negotiating deals with testers who are weeding out the files with credit freezes and the ones that have been identified as stolen. Then they will resell the “good” files for a profit. There is no telling how many levels there are.

So, just because nothing happened yet does not mean it won’t happen sometime in the next few years. But let’s get back to the wide-open back door. Once you have frozen your big three credit bureaus, you are only partially done. There is a whole separate set of credit bureaus used by banks to determine whether they want to open a new banking account for you. About the only people who know about these bureaus are bankers (and not all of them) and people who have had banking problems and were turned down because of the reports of previous bounced checks, fraud, etc.

The Consumer Protection Bureau refers to these credit reporting bureaus as check and bank screening companies and lists them on pages 21 through 24 on their List of Consumer Reporting Companies. If you do a little research, you will find which of these companies have the most market share and the ones you should freeze your file with. Visit the individual websites to fill out forms to freeze your files.

Not only are most people unaware of these companies, even more people are unaware that they can freeze their banking files with them just like the big three credit bureaus. Here is why this is important. If a bank cannot access your check and bank file, they probably will not open a new account in your name. Remember the list of items stolen during the Equifax breech? It included Social Security numbers, addresses and driver’s license numbers. These make it easy to open accounts in somebody else’s name — unless you have frozen your file.

So, take a few minutes and find out about check and bank screening companies and how to freeze your file. You will find it is easier than you think and well worth that extra sleep you should get every night.

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Written by Dave, an Accredited Financial Counselor® who has been helping families plan their finances for more than 30 years.