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Although you have many tools to protect your personal information, your data is probably as dangerous as it ever was. It is not that you do not take precautions (even if many Americans do not), it is that your personal information is stored in so many places – some of which you can not control.
"The challenge with identity theft in our day is that we are an online culture," says Adam Carroll, Founder and Chief Education Officer of National Financial Educators. "I think most Americans would be amazed to know how many seats actually have their credit account and current account number."
Consider the breach of the Equifax data. Nearly 148 million people were affected by a violation of their personal information in a company with which many had no direct contact – however, without a credit file at Equifax and other credit reporting agencies, these people could not get any credit .
The credit system lacks transparency from the consumer's point of view. Many Americans know that their credit history is compiled by credit reporting agencies, which in turn send information to creditors seeking risk assessment – but not many Americans know that lenders see a different version of their credit histories than snapshots they receive. Several credit assessment systems distil the same set of information into specific classifications for risk factors in different sectors.
Creditors get a complete view of the credit history that may contain costly errors. According to a 2013 survey of 60 minutesalmost 20% of Americans had some form of error in their credit report, resulting in a reduction in the credit score in 10% of these cases.
As a consumer, you only receive credit reports on request, or you pay for regular access or monitoring of this report. Lenders have the upper hand over consumers when it comes to credit information and transparency.
A recent one Forbes The article suggests that blockchain technology – the basic principle behind Bitcoin and other cryptocurrencies – can be used to give consumers more control over their credit profile. Blockchains do not have a central authority, instead they register secure transactions on a large network.
Theoretically, a blockchain-style technology could allow you to securely compile all the elements of credit history and send them to potential creditors. Identity theft would be reduced because there is no centralized database to be hacked: thieves may have to hack one account at a time or invent a new way around the blockchain.
A concept of blockchain can work well outside the traditional banking system, to help the nearly two billion people around the world who are "barred" – without a traditional bank account or access to one. Blockchain businesses such as Blockchain for Social Impact and BanQu are already working to provide this under-served group with access to credit.
Moeda adopts a similar approach based on blockchain towards entrepreneurs who are little served by traditional financial outlets. They hope to apply blockchain technology to simplify the financing process and eliminate the obstacles that prevent the smaller and / or riskier companies from accessing the necessary funds.
Blockchain technology could be the key to giving consumers the ability to control their credit history in the future, but the key word is "future".
For now, your best methods for checking and protecting your credit history are the good sense of the old school. It uses complex antivirus software and passwords to protect your data at home, uses only secure and encrypted transfer methods, limits the exposure of your personal data and keeps track of your credit and credit reports to minimize damage if an attacker steals your information
If you wish to track your credit to prevent identity theft and view your credit reports and scores, check out our free Identity Protector.
Photo © iStockphoto.com / D-Keine
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