How 5 Common Cybercrimes Can Affect Your Credit
Cybercrime is a massive and growing global problem, causing as much as $600 billion in damage to the global economy every year, according to a report from McAfee and the Center for Strategic and International Studies (CSIS). Cybercrime is widespread within the U.S. as well. The 2017 Norton Cyber Security Insights Report found that 143 million Americans were affected in 2017 alone.
Cybercrime doesn’t just present an inconvenience to victims. It can also cause serious damage to your credit history and take a lot of time to rectify, especially if a fraudster has been able to assume your identity or open new financial accounts under your name over a long period of time.
“It’s important to note that cybercrime in and of itself is not what’s problematic when it comes to your credit score,” said Mike Pearson, founder of Credit Takeoff. “Cybercrime is simply a means to an end: accessing your personal information to steal your identity.”
How does cybercrime affect your credit?
When cyberattackers gain access to personal information stored on your computer or accessible online, they can damage your credit by applying for credit in your name or buying things using your information.
“A simple example is that a cyberattacker, armed with your personal information, could open up a new cellphone contract in your name, and then not pay the bill for several months,” said Pearson. “It might take you several more months before you even notice the fraudulent account on your credit report.”
A more egregious crime would be an attacker opening a credit card in your name and running up a huge balance.
Missing payments you didn’t know were due under your name can be devastating to your credit score, and your credit utilization ratio will get out of whack if the thieves run up a large amount of debt in your name.
The actions of attackers can also affect your score in more subtle ways: If they attempt to open multiple credit cards or loans in your name, the new credit inquiries will ding your score.
5 common cybercrimes that can affect your credit
Here are five cybercrimes that threaten consumers and can end up negatively affecting your credit score.
Short for “malicious software,” malware are infected programs that users are tricked into installing on their computers, usually by way of a website or pop-up ad. When the computer user clicks on the site or ad, the computer downloads a virus that can interact with the computer without the user’s knowledge. Don’t click on links that look suspicious — maybe the name of the financial institution is misspelled — or come from sources you don’t know and trust. When in doubt, go to the institution’s website directly versus clicking on a link in an email or text.
This crime involves fraudulent websites or email correspondence that a computer user trusts; the user is tricked into divulging personal information, such as usernames, passwords, bank information or a Social Security number. The perpetrators use this trick to get information that can allow them to gain access to people’s online accounts.
Spear-phishing is like phishing but is targeted narrowly to trick certain company employees into providing customer or business information that is supposed to stay secret. This crime may result in corporate security breaches that can expose important company information and customer data. When cyberattackers gain access to customer data, they can use that information to apply for credit in others’ names or make purchases using stolen credit card numbers, which can negatively affect the victims’ credit.
Medical identity theft
Identity theft is when one person poses as another. In this case, the perpetrator assumes someone’s name and insurance information to access medical services. Such fraud leads to false claims and data being added to the medical record of the victim, which can seriously compromise the victim’s care with potentially life-threatening consequences. The victim may also face large medical bills that they can’t pay, leading to a spiraling crisis of debt that can hurt their credit.
Social media scams
Social media can give criminals a lot of information about your whereabouts, relationships and activities. It can also serve as a conduit for fraudulent contacts to trick users into giving bad actors access to accounts, including social media and other types, such as financial.
What to do if you suspect credit fraud
If you think you’ve been affected by a cybercrime, tell your local police department the details of what happened. You may also need to inform the FBI and the Federal Trade Commission (FTC). Even seemingly insignificant problems can have big ramifications; they may be part of a larger pattern that authorities are watching.
If you think cybercriminals have committed credit fraud by stealing your identity, it’s essential to alert the companies or banks where you know the criminal has been active. Consider putting fraud alerts on your credit reports, implementing a credit freeze at the three main credit bureaus and notifying the FTC of identity theft.
7 ways to prevent cybercrime
Nearly 8 in 10 Americans have been victimized by cybercrime or know someone who has been, according to the 2017 Norton report. And while it may seem hopeless, there are many things you can do to avoid becoming a victim of cybercrime. It starts with having good awareness of the issues at play, staying alert for suspicious activity and taking some simple steps to protect your computer and network. Here are seven steps to consider.
- Be skeptical. Always be wary when you receive unsolicited emails or visit unfamiliar websites, especially those that appear odd in any way. If you have suspicions about a communication or site, look up the details online to see if others have reported fraud or abuse. Resist downloading any applications that aren’t from a trustworthy source. Make sure the URL of any website you visit starts with HTTPS, which stands for Hypertext Transfer Protocol Secure, and means all communications between your browser and the website are encrypted.
- Install and update antivirus and antispyware software. Antivirus and antispyware software can help safeguard your computer from malicious software programs that carry viruses or are designed to spy on your computer use. This software works to disarm and delete any malicious code it finds. Always get this software from trusted sources and ideally find programs that update automatically.
- Strengthen your passwords. Create complex passwords with a combination of letters, numbers and symbols. Avoid using the same password for multiple sites, and change them often. It can be helpful to use a password management application that automatically tracks all your passwords, making it easier to change them.
- Shore up your Wi-Fi security. The insecurity of Wi-Fi networks creates a wide opening for cybercrime. Use a secure password and WPA2 encryption. Update your router firmware. And be especially cautious about what activities you do online using public Wi-Fi; don’t do online banking or send personal information like your Social Security number on public networks. Setting up a virtual private network (VPN) to use in public places is a good idea — it encrypts your data as it travels from your device to its destination.
- Update your operating system. Computer operating systems need to be kept up-to-date so they are running with all the latest security fixes to prevent attackers from gaining access. Check regularly for any updates available for your operating system.
- Use a firewall and turn off your computer. Setting up a firewall can keep your computer safe from attacks. Another way to help with this is to turn your computer off regularly. Powering down cuts an attacker’s connection to your machine, stopping them in their tracks.
- Get credit and/or identity protection. Subscribing to a service that provides credit and/or identity fraud protection could provide security and peace of mind. There are many reputable companies offering these services that consistently monitor your personal information for any concerning changes. If there has been damage done to your credit because of cybercrime, a credit repair agency may be able to help you recover.
The bottom line
Understanding the dangers and dynamics of cybercrime begins with awareness and knowledge. Start by educating yourself about what to look out for and how to protect yourself. Make sure your computer is as safe as it can be, and act quickly if you suspect any fraudulent activity.