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Category: Identity Theft

Identity Thieves Bought a New Car in Her Name—Here’s How She’s Fighting It

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Jen* is one of the few people that opens and reads every piece of mail they receive. It’s a quirk that has paid off: A piece of junk mail is how Jen found out someone had stolen her identity.

“I opened a letter from Macy’s, which I thought was weird,” she said. “I haven’t shopped there in years. But the letter was a rejection of a credit card application.”

Jen took immediate action, placing a credit freeze on her accounts. She thought it was all resolved then, but her identity theft nightmare was just beginning.

The Depth of the Identity Theft Problem

Jen checks her free credit report every four months. After finding the Macy’s rejection letter, she immediately checked her report again.

There were several credit inquiries for loans and credit cards that she had not made. Banks and lenders had rejected all of them. However, there was one item on the report that had been approved: a car loan for a $30,000 vehicle.

“The thief applied for a loan through an online company, which is much easier than applying for a loan in someone’s name in person,” Jen said. “She picked up a used Lexus the next day. She used my Social Security number but didn’t use my actual last name. The company still didn’t bat an eye.”

The thief even took out a car insurance policy in Jen’s name. Again, the thief applied for an account online for easier approval.

Beyond Credit—How Theft Affects You

“There were about a dozen inquiries on my credit report besides the car loan, all of which hurt my credit score,” said Jen. “And, the thief didn’t make payments on the insurance or the car, which could have hurt my credit too. I had to take action right away.”

Jen then filed a police report. An officer came to her home, and she handed over copies of her credit report with all of the fraudulent inquiries. Because it was a financial matter, the officer handed the case off to a different department.

Once Jen had a copy of the police report, she took action rather than waiting for the police to work it out. Luckily, her employer offered a free identity protection service through InfoArmor. She called the company, and representatives assigned her a case manager. Together, Jen and the case manager made a list of every false inquiry on Jen’s report and started contacting the companies one by one to have them removed.

“There were inquiries for store credit cards, phone companies, furniture stores, and car loans,” said Jen. “All of them were at places in California, and I’m thousands of miles away from there.”

The process couldn’t be completed in one day. The thief had taken information from Jen’s LinkedIn profile to verify employment dates on applications, and the person’s actions changed her security questions on the credit bureau sites as well.

Jen’s credit report now showed the thief’s address and other information instead of her own, so she couldn’t dispute the charges online. Instead, she had to call each business herself and prove her identity.

Most of the companies’ customer service departments were available only between 9 a.m. and 5 p.m., when Jen was at work. “I had to squeeze in calls on my lunch break and every spare minute I had,” she said.

Over the course of two months, Jen spent over 80 hours on the phone to dispute charges and inquiries. There were times when she was on the phone for five hours straight. Despite the long hours, she values the identity protection service for helping her handle it.

“[The case manager] was on the phone with me for the full time,” she said. “He helped me keep it together and work through the list of companies.”

Other Financial Ramifications of Identity Theft

Although the phone calls were tedious and incredibly time consuming, there were larger issues that Jen hadn’t even considered. Her InfoArmor case manager helped her navigate those problems as well.

“I could never have thought of it all on my own,” she said. “But he told me I needed to alert my 401(k) company, my mortgage lender, and my credit union account so [the thief] couldn’t access those accounts too.”

Worst of all, the problem still isn’t over. The car loan has been removed from her credit report, but other inquiries remain. Jen also worries about future issues, such as the thief filing a fraudulent tax return in her name to get a tax refund.

“I’m worried about my taxes,” she said. “It’s a real stressor. I contacted the IRS, but I’m still concerned.”

She has every reason to worry. Despite now having the thief’s full name and address, the police have not yet arrested or charged the individual. Instead, the investigation is ongoing thousands of miles away.

Advice for Dealing with ID Theft

Thanks to Jen’s hard work, her credit score has recovered since the identity theft. She notes that not everyone could handle identity theft as quickly as she did, nor does everyone have the means.

“It was time consuming and tedious, but it was also expensive,” she said. “I had to pay to FedEx documents across the country, to put a credit freeze on my account, and to have access to a fax machine—most of the documents couldn’t be emailed because of security concerns, so faxing them was the only way.”

In addition, Jen said that her employer and coworkers were understanding as she navigated the process. In many workplaces, taking personal calls during work wouldn’t be possible. Other people might have had to take time off from work to deal with identity theft, hurting their paycheck.

For those who face a similar situation, Jen recommends you do the following:

  • Take diligent notes and keep them nearby. Every credit inquiry Jen disputed had its own case number, and because she sometimes had to wait days for a response, Jen had to move quickly when she did get a response. Keeping a notebook handy with every case number, the date and time of each call, and who she spoke to last helped her stay on top of the issue.
  • Check your credit report. Jen caught the problem early, which saved her credit and finances. It’s a smart idea to check your credit report every four months for red flags.
  • Consider hiring a service. While Jen was able to get identity protection for free, she says she would have willingly paid for it. Her case manager helped her through every phone call and identified other actions she needed to take to protect herself.
  • Give yourself a break. Dealing with endless phone calls and the stress of identity theft can be hard on your nerves and well-being. Jen advises giving yourself a break every now and again and indulge in some self-care.

Moving Forward after Theft

Jen doesn’t know how the thief got her Social Security number or name, especially because she’s diligent about protecting sensitive information. However, she suspects it’s from medical forms from her frequent doctor appointments, as they all required her to enter her Social Security number, address, birthday, and other identifying information—making her an easy target for identity theft.

“Unfortunately—and the police said the same thing—people take those forms and sell them on the black market for others to use,” she said. “It’s made me much more conscious of what I put out there.”

Jen’s story isn’t an anomaly. A whopping 41 million Americans have experienced identity theft. That’s why it’s so important to continually and regularly check your credit report.

“You have to stay on it to prevent your name and credit report from being ruined,” Jen said. “Be diligent.”

*Because the investigation into this situation is ongoing, the individual featured asked that we not use her real name.

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The post Identity Thieves Bought a New Car in Her Name—Here’s How She’s Fighting It appeared first on Credit.com.

Source: credit.com

What Happens to Mortgage Rates When the Fed Cuts Rates?

Just about everybody with a wallet is impacted by the Federal Reserve. That means you—homeowners and prospective buyers. Whether you’re already nestled in to the house of your dreams or still looking to find it, you’ll probably want to track what happens to mortgage rates when the Fed cuts rates. When the Fed (as it’s commonly referred to) cuts its federal funds rate—the rate banks charge each other to lend funds overnight—the move could impact your mortgage costs.

The Fed’s overall goal when it cuts the federal funds rate is to stimulate the economy by spurring consumers to spend and borrow. This is good news if you are carrying debt because borrowing tends to become less expensive following a Fed rate cut (think: lower credit card APRs). But in the case of homeownership, what happens to mortgage rates when the Fed cuts rates can be a double-edged sword.

What happens to mortgage rates when the Fed cuts rates depends on many factors.

The connection between a Fed rate cut and mortgage rates isn’t so crystal clear because the federal funds rate doesn’t directly influence the rate on every type of home loan.

“Mortgage rates are formed by global market forces, and the Federal Reserve participates in those market forces but isn’t always the most important factor,” says Holden Lewis, who’s been covering the mortgage industry for nearly 20 years and is also a regular contributor to NerdWallet.

To understand which side of the sword you’re on, you’ll need an answer to the question, “How does a Fed rate cut affect mortgage rates?” Read on to find out if you stand to potentially gain on your mortgage in a low-rate environment:

How a fixed-rate mortgage moves—or doesn’t

A fixed-rate mortgage has an interest rate that remains the same for the entire length of the loan. If the Fed cuts rates, what happens to mortgage rates if you are an existing homeowner with a fixed-rate mortgage? Nothing should happen to your monthly payments following a Fed rate cut because your rate has already been locked in.

“For current homeowners with a fixed-rate mortgage set at a previous higher level, the existing mortgage rate stays put,” Lewis says.

If you’re a prospective homebuyer shopping around for a fixed-rate mortgage, the news of what happens to mortgage rates when the Fed cuts rates may be different.

For prospective homebuyers: If the Fed cuts its interest rate and the 10-year Treasury yield is similarly tracking, the rates on fixed-rate mortgages could drop, “and you could lock in interest at a lower fixed rate than before.”

– Holden Lewis, mortgage expert and NerdWallet contributor

The federal funds rate does not directly impact the rates on this type of home loan, so a Fed rate cut doesn’t guarantee that lenders will start offering lower mortgage rates. However, the 10-year Treasury yield does tend to influence fixed-rate mortgages, and this yield often moves in the same direction as the federal funds rate.

If the Fed cuts its interest rate and the 10-year Treasury yield is similarly tracking, the rates on fixed-rate mortgages could drop, “and you could lock in interest at a lower fixed rate than before,” Lewis says. It’s also possible that rates on fixed mortgages will not fall following a Fed rate cut.

How an adjustable-rate mortgage follows the Fed

An adjustable-rate mortgage (commonly referred to as an ARM) is a home loan with an interest rate that can fluctuate periodically—also known as variable rate. There is often a fixed period of time during which the initial rate stays the same, and then it adjusts on a regular interval. (For instance, with a 5/1 ARM, the initial rate stays locked in for five years and then adjusts each year thereafter.)

So back to the burning question: If the Fed cuts rates, what happens to mortgage rates? The rates on an ARM typically track with the index that the loan uses, e.g., the prime rate, which is in turn influenced by the federal funds rate.

If the Fed cuts rates, what happens to mortgage rates? If you have an adjustable-rate mortgage, you may see your rate change.

“If the Fed drops its rate during the adjustment period, you could see your interest rate go down and, in turn, see lower monthly payments,” says Emily Stroud, financial advisor and founder of Stroud Financial Management.

Since ARMs are often adjusted annually after the fixed period, you may not feel the impact of the Fed rate cut until your ARM’s next annual loan adjustment. For instance, if there is one (or more) rate cuts during the course of a year, the savings from the rate reduction(s) would hit all at once at the time of your reset.

If the Fed cuts rates, what happens to mortgage rates for prospective homebuyers considering an ARM? An even lower rate could be in your future—at least for a specific period of time.

“If you’re looking for a shorter-term mortgage, say a 5/1 ARM, you could save considerably on interest,” Stroud says. That’s because the introductory rate of an ARM is usually lower than the rate of a fixed-rate mortgage, Stroud explains. Add that benefit to lower rates fueled by a Fed rate cut and an ARM could be enticing if it supports your financial goals and plans.

“If the Fed drops its rate during the adjustment period, you could see your interest rate go down and, in turn, see lower monthly payments.” 

– Emily Stroud, financial advisor and founder of Stroud Financial Management

Benefits of other variable-rate loans following a rate cut

If you have a Fed rate cut and mortgage rates on your mind and are a borrower with other types of variable-rate loans, you could be impacted following a Fed rate cut. Borrowers with variable-rate home equity lines of credit (HELOCs) and adjustable-rate Federal Housing Administration loans (FHA ARMs), for example, may end up ahead of the curve when the Fed cuts its rate, according to Lewis:

  • A HELOC is typically a “second mortgage” that provides you access to cash for goals like debt consolidation or home improvement and is a revolving line of credit, using your home as collateral. A Fed rate cut could result in lower rates for variable-rate HELOCs that track with the prime rate. If you are an existing homeowner with a HELOC, you could see your monthly payments drop following a Fed rate cut.
  • An FHA ARM is an ARM insured by the federal government. If you’re wondering about a Fed rate cut and mortgage rates, know that this type of mortgage behaves much like a conventional variable-rate loan when the Fed cuts it rate, Lewis says. Existing homeowners with an FHA ARM could see a rate drop, and prospective homebuyers could also benefit from lower rates following a Fed rate cut.

When it comes to a Fed rate cut and mortgage rates, refinancing to a lower rate could be an option for existing homeowners.

Refinancing: A silver lining for fixed rates

When it comes to a Fed rate cut and mortgage rates, refinancing to a lower rate could be an option if you have an existing fixed-rate loan. The process of refinancing replaces an existing loan with a new one that pays off your old loan’s debt. You then make payments on your new loan, so the goal is to refinance at a time when you can get better terms.

“If someone buys a home one year and a Fed rate cut results in a mortgage rate reduction, for example, it presents a real refinance opportunity for homeowners,” Lewis says. “Just a small percentage point reduction could possibly trim a few hundred bucks from your monthly payments.”

Before a refinancing decision is made based on a Fed rate cut and mortgage rates, you should consider any upfront costs and fees associated with refinancing to ensure they don’t offset any potential savings.

Managing your finances as a homeowner

You might be expecting some savings in your future now that you’re armed with information on what happens to mortgage rates when the Fed cuts rates. Whether you’re a homebuyer and financing your new home is going to cost you less with a lower interest rate, or you’re an existing homeowner with an ARM that may come with lower monthly payments, Stroud suggests to use any uncovered savings wisely.

“Invest that cash back into your property, pay down your home equity debt or borrow with it,” she says.

Understanding the connection between the Fed rate cut and mortgage rates can help you better manage your finances as a homeowner.

While news of a Fed rate cut may entice you to analyze how your mortgage will be impacted, remember there are many factors that help to determine your mortgage rate, including your credit score, home price, loan amount and down payment. The Fed’s actions are only one piece of a larger equation.

Even though the Fed’s rate decisions may dominate headlines immediately following a rate cut, your home is a long-term investment and one you’ll likely maintain for years. To best prepare for what happens to mortgage rates when the Fed cuts rates is to always manage your home finances responsibly and be sure to make choices that will lead you down the right path based on your financial goals.

*This should not be considered tax or investment advice. Please consult a financial planner or tax advisor if you have questions.

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The post What Happens to Mortgage Rates When the Fed Cuts Rates? appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

Don’t Get Tricked: Identity Protection Tips You Need

A woman sits on a gray couch with a laptop on her lap, drinking a cup of coffee

The weather is turning, fall is in the air, and Halloween is around the corner—which means it’s National Cybersecurity Awareness Month. How can you ensure October is full of treats while not falling for any scammers’ tricks? By arming yourself with these identity protection tips.

Every American should understand the basics of identity theft protection. According to the most recent report by the Bureau of Justice Statistics, 10% of people 16 and older have been the victim of identity theft. That’s why we’re encouraging people to educate themselves on identity protection tips this autumn. After all, there’s nothing quite as scary as identity fraud!

Here are some identity theft tricks to watch out for and identity security treats to take advantage of.

Trick: Using Your Data to Open New Accounts

According to the FTC, credit card fraud—including opening new credit card accounts—was the most commonly reported form of identity theft in 2019. Thieves can rack up hundreds of dollars’ worth of bills before you know it happened.

Here are a few things to keep in mind when it comes to your cybersecurity to avoid your data being used to open new accounts in your name:

  • Never use the same password across multiple accounts. Switch your passwords up.
  • Never use a password that’s easy to guess. This includes passwords that include your birthday, first or last name, or address.
  • Use passwords that are random combinations of numbers, letters, and symbols.
  • Enable two-factor authentication whenever it’s offered.
  • Don’t share or write down your passwords.
  • Never click on unknown email links or pop-ups on websites.
  • Make sure websites are secure before entering your payment information.
  • Never connect to public Wi-Fi that isn’t secure.
  • Never walk away from your laptop in public places.
  • Enable firewall protection.
  • Monitor your accounts and credit reports for unusual activity.

Treat: Check Your Credit Reports

Identity theft protection starts by being proactive and regularly monitoring your information for suspicious activity. That includes monitoring your credit report.

Did you know that you’re entitled to one free copy of your credit report each year from all three credit reporting agencies? In honor of National Cybersecurity Awareness Month, make October the month that you request your reports and go over them with a fine-toothed comb. Make sure you recognize all the open accounts under your name.

[Note: Through April 2021, you can review your credit reports weekly.]

An added bonus of checking your reports early in the month is that you can give your credit a good once-over before the upcoming holiday shopping season. Unexplained dips in your credit score could be a sign that something is wrong.

When you request your free credit report from the credit bureaus, your report does not come with your credit score—you have to request that separately. Sign up for ExtraCredit to get 28 of your FICO® scores and your credit reports from all three credit bureaus. You’ll also get account monitoring and $1 million identity theft insurance.

Protect Your Identity with ExtraCredit

Trick: Charity Fraud

October also happens to be Breast Cancer Awareness Month, and everywhere you look, pink is on display. With so much national attention on breast cancer, it’s easy to fall for scams that claim to be legitimate charities.

Consumers should also be on the lookout for phony COVID-19 related scams this fall and winter. For example, watch out for fake charities that pretend to provide COVID relief to groups or families but are simply stealing money.

Even worse than handing over money to these heartless fraudsters is that you may have handed over your credit card numbers or other personally identifiable information in the process.

Treat: Know Your Worthy Causes

Before donating to a charitable cause, do your homework. You can use websites such as Charity Navigator, CharityWatch, and the Better Business Bureau’s Wise Giving Alliance to check a charity’s reputation. Additionally, consider contacting your state’s charity regulator to confirm the organization is registered to raise money in your state.

After you’ve verified the status of the charity, consider making donations directly through the national organization. Avoid giving money or financial information directly to someone that reaches out to you through email, phone calls, or door-to-door interactions.

It might be a bit of extra work, but at the end of the day, you can feel good knowing your money is going to support a real cause. If you want to support October’s Breast Cancer Awareness Month, consider donating directly on the national website. An added bonus is that you’ll receive a receipt you can use for tax deduction purposes.

Trick: Tax Refund Fraud

Every year, the Internal Revenue Service announces its “dirty dozen” scams. These are the tax fraud scams the IRS determines to be the most common for the year. The 2020 list includes refund theft. A tax thief gains access to your information, files a fraudulent return in your name before you do, and has the funds paid out them. The only way you find out about it is that your legitimate tax return—the one you submit—is rejected for having already been filed.

Another way individuals fall victim to tax refund fraud is by using an unscrupulous return vendor. Dishonest vendors and ghost preparers steal personal information to file a tax refund and pocket the money or use that information for other types of identity fraud.

It’s unclear what exactly the next round of stimulus legislation will include, but if another stimulus check is included, watch out for attempts to steal your COVID stimulus checks. Remember that the IRS never contacts you via email, social media, or text.

Treat: File Early

It may feel like you just finished filing your 2019 taxes, but it’s never too early to start preparing for next year. While filing your taxes might be the last thing you want to think about this month, it’s crucial to stay on top of your tax return documents so you’re ready to file as early as possible. This is especially true for individuals who have reason to believe that their personal data has already been breached.

Always ensure you work with a reputable tax return vendor. You can look at the vendor’s online reviews before considering them as an option for tax return help.

Additionally, individuals that are paid to assist with or prepare federal tax returns must have a Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on returns. Always ask for this number before you hire an individual and hand over your personal information.

If you file early, you can beat out someone filing before you and receiving your return first. The earliest you can file is January.

Trick: Social Media Scams

Our social media accounts allow us to stay connected with friends and family. Unfortunately, scammers understand this and have started using social media to commit identity fraud.

There are many variations of social media phishing scams, but the basics are generally that a scammer creates an account to gain your trust and gather personal information from you. For example, many people have their name, birthday, and workplace information on their Facebook or other social media account. Those three things alone could be enough for someone to gain everything else they need to create a credit card application under your name or access your existing accounts.

Treat: Be More Exclusive and Private

Consider taking a quiet October morning to comb through your social media accounts. Start with your followers. Consider deleting everyone you don’t know personally.

If a follower base is important to you, consider another approach. Go through each social profile and scrub any personal details. Change the spelling of your last name slightly, delete your birthday, and remove other personal information, such as place of work. Ultimately, this can reduce the risk of being an easy target for identity fraud.

These core identity protection tips should help you stay safer online. With COVID-19 causing people to feel scared, individuals are more vulnerable to being tricked. Remember that identity fraud happens to millions of people every year, and it’s important to remain vigilant.

Stay Vigilant This Fall

Identity theft can have long-lasting consequences. If you’re recovering from identity fraud or simply unhappy with your credit score, consider signing up for ExtraCredit. ExtraCredit is a five-in-one credit product that provides tools to helps you build, guard, track, reward, and restore your credit.

Sign Up Now

The post Don’t Get Tricked: Identity Protection Tips You Need appeared first on Credit.com.

Source: credit.com

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