Credit freeze may be best defense against identity theft
Dear Liz: A large safe containing our passports, Social Security cards, birth certificates, checks and credit cards was stolen from our home several days ago. We notified our bank and credit card companies. Is there an advantage to requesting new Social Security numbers? If we do this, would it affect our credit in any way?
Answer: New Social Security numbers wouldn’t necessarily protect you from identity theft and could create additional complications.
Thieves might still be able to use your old numbers to establish new accounts, and those fraudulent accounts could show up in your credit reports. If for some reason the credit bureaus didn’t combine the records for your old and new numbers, then you could be left without any credit history at all, which could make getting future credit difficult.
The Identity Theft Resource Center, which advises victims and has a fact sheet on this issue (No. 113, available on its website at https://www.idtheftcenter.org), typically doesn’t recommend applying for new numbers. Instead, it suggests credit freezes, which prevent most lenders from viewing your credit reports or establishing new accounts without your consent.
Credit freezes aren’t foolproof, since some lenders don’t check with credit bureaus before opening accounts. Credit freezes also won’t prevent a thief from using your Social Security numbers to commit healthcare fraud or criminal identity theft (which is when a thief pretends to be you when he or she is arrested). Also, there may be fees involved with freezing and unfreezing your credit reports.
But credit freezes are probably your best defense at this point, before you’ve been victimized. You can learn more about credit freezes at the Consumers Union site, DefendYourDollars.org.
Housing counselor’s advice needed
Dear Liz: I’m 59 and have been unemployed for more than three years. My retirement is gone, my unemployment insurance has expired and my family resources are maxed out. I own one rental property that I’m trying to sell because it has a negative cash flow. The comparable market is glutted now. I’ve missed the last four payments on my home of 32 years, although I’ve applied for help through the Making Homes Affordable program. I am overwhelmed and unsure how to handle this. Do I just walk away? I am actively seeking employment, working with Goodwill’s Job Connection, but don’t have much hope at this stage. I’m too young for a reverse mortgage and too old for doing physically demanding work.
Answer: Talk to a housing counselor approved by the Department of Housing and Urban Development about your situation, including the rental property. (You can get a referral to this free or low-cost help at https://www.hud.gov.)
You don’t need the financial drag of this property adding to your woes. Ideally you’d be able to slash the price for a quick sale, or if you owe more than the property is worth, to arrange for a short sale. That’s when the lender agrees to accept the proceeds of the sale in lieu of the larger amount you owe. Otherwise, you may need to let the property go into foreclosure.
You may not be able to save your primary residence either. If you don’t have any income, you’re unlikely to get a refinance or a modification, but the HUD counselor can apprise you of your options. If you have any equity in the property, it probably makes sense to sell it while you can rather than let the bank take over and lose a small fortune in foreclosure-related fees. For more information, read attorney Stephen Elias’ book, “The Foreclosure Survival Guide.”
Fiance’s poor credit is a concern
Dear Liz: To what extent do you inherit a spouse’s credit score for activity that occurred prior to the marriage? My fiance and I would like to get married soon. However, he has been going through a short-sale process for almost a year. The bank took a long time to review the matter and would not accept the multiple offers. My fiance has recently stopped making the mortgage payments and that has negatively impacted his credit. When we get married, does his credit score activity become incorporated into mine?
Answer: No. Your credit reports and credit scores aren’t combined when you marry.
If you apply for a loan together, both of your credit histories and scores would be taken into account. His bad scores could prevent you from getting approved. If you did get approved, you would probably have to pay a much higher interest rate.
If you do plan to get a mortgage or other loan together down the road, he should start to rehabilitate his scores as soon as his home situation is resolved. He should expect his scores to remain in the poor-to-fair category for at least three years, and it may take as many as seven years to get them into the “excellent” range.
Liz Weston is the author of “The 10 Commandments of Money: Survive and Thrive in the New Economy.” Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or via https://www.asklizweston.com. Distributed by No More Red Inc.
