For decades, data breaches have exposed millions of Americans’ personally identifiable information. Breaches continue to rise and risk the personal and financial data without victims knowing.
The well-known 2017 Equifax data breach jeopardized 143 million Americans’ names, birth dates, addresses, Social Security Numbers and driver’s license
s numbers. As a result, Equifax offered victims one free year of their credit monitoring service but required users to agree not to take lawful action if anything went wrong. Victims were in outrage as Equifax was only promoting their identity theft services, and the service wouldn't stop thieves from using their personal data for fraud. Consumers also accused Equifax of creating bad PINs that were merely the credit freeze request date when freezing their credit.
Those who weren’t victims of breaches had the option to freeze their credit, but it cost at least $10 for each bureau and amounted to at least $30. If you chose to unfreeze your credit for any reason, you’d pay the same price. The only exception for free credit freezing was if you were a victim of identity theft or fraud and had supporting documents such as a police report. Fortunately, in Sept. 2018, the Economic Growth, Regulatory, Relief and Consumer Protection Act eliminated the cost of credit freezes. The law now allows everyone to freeze and unfreeze their credit free of charge to help protect their identity and financial data.
The FTC Consumer Sentinel Network report shared the latest alarming statistics pertaining to credit card fraud that may urge you to protect your financial information sooner.
- Credit card new account fraud is up 24 percent from last year with 130,928 reports
- In 2018, credit card fraud took the lead in identity theft reports with over 167,000 reports of fraud with an existing or new account
- Credit fraud totaled over $23 million in loss costs, the average case losing $376
What is a Credit Freeze?
A credit freeze, or security freeze, is a hold placed on your credit report to prevent thieves and lenders from accessing it to apply for new credit cards, loans or sell your financial data. The report will be nonexistent until you unfreeze it. Ted Rossman, Industry Analyst for CreditCards.com, shared the importance of security freezing.
“I really like the idea of freezing your credit because it’s the best defense we have from preventing criminals from opening accounts in our names,” he explained.
Freezing your credit does not prevent you from reviewing your own credit report or making purchases with existing accounts. It will also not stop fraudsters from leveraging existing accounts and credit. Lastly, it does not permanently restrict you from applying for loans or credit cards. If lenders or employees need access, simply lift the credit freeze for a specified amount of time or permanently unfreeze it. Keep in mind that some authorities still have access to your credit report including your current collectors, the government for lawful reasons including child support and warrants, and surprisingly, marketers to send credit card offers and other specials. But before placing a freeze on your credit, it’s important to understand the difference between a credit lock and a credit freeze. A credit lock prevents lenders from accessing your credit for applications. Credit locks can be easily lifted or unlocked using your smartphone instantly. Consumers often lock their credit if their personal information has been compromised. TransUnion and Equifax allow you to lock your credit for free, while Experian charges as low as $4.99/mo. for the Experian CreditLock service. But for the best guard against financial theft freezing your credit reduces risks and provides extra protection.
How to Freeze Your Credit
It’s important to note if you’d like to freeze your credit, you’ll need to place a freeze from all three credit bureaus, TransUnion, Experian and Equifax. As you start the process, the FTC shared the following for consumers to keep in mind:
“If you request a freeze online or by phone, the agency must place the freeze within one business day. If you request a lift of the freeze, the agency must lift it within one hour. If you make your request by mail, the agency must place or lift the freeze within three business days after it gets your request. You also can lift the freeze temporarily without a fee.”
Here’s how it works:
- Equifax - Create a myEquifax account to freeze your credit, or call 1-800-685-1111. You can also mail in the Freeze Request Form to the following address: Equifax Information Services LLC P.O. Box 105788 Atlanta, GA 30348
- TransUnion - Complete the online request form, or call 1-888-909-8872. You may also mail the request to the following address: Transunion LLC P.O. Box 2000 Chester, PA 19016
- Experian - Request a freeze using Experian’s Freeze Center, or call 1-888-397-3742. You may also mail the request to the following address: Experian Security Freeze P.O. Box 9554 Allen, TX 75013
You may also be asked to complete security questions to verify your identity. After submitting the credit freeze request, you’ll receive confirmation within three business days. Once a freeze is placed, individuals and companies won’t be able to see your credit report. So, when’s the best time to freeze credit without worry? Rossman recommends freezing your credit as soon as possible, even if you haven’t been a victim of identity theft.
”I think it’s a good idea to do it as soon as possible. There are so many data breaches I think that we as consumers should just assume that our data is compromised,” he said. “You can rest assured that you’ve protected yourself. It might make sense to hold off if you’re in the market for a loan very soon.”
Freezing Your Child’s Credit Report
The law allows parents to freeze credit reports for minors under 16 and adults to freeze and unfreeze their credit free of charge with the three credit bureaus. A child’s identity is more coveted because of the number of inactive years before a child uses their credit. Due to inactivity, many parents don’t think to check their child’s identity for theft or fraud unless there’s a warning such as mail addressed to them. A recent Javelin study found that over one million children were victims of identity fraud in 2017. As a result, it costs the victims’ families a total of $540 million out of pocket recovery costs. Rossman expressed the importance of freezing your child’s credit immediately.
“It’s more important to freeze your kids' credit than your own credit because we’re just not in the habit of checking up on it,” he said. “It can be worse the longer it goes undetected. A lot of people don’t even realize this could happen to your kids."
Freezing your child’s credit requires a few extra steps, but is worth the time and effort. A parent or legal guardian must request the freeze on the child’s behalf. Here’s what documents you should expect to provide based on Experian’s requirements for freezing a child’s credit:
- Full name
- Addresses for the past two years
- Date of birth
- A copy of the child’s birth certificate
- A copy of the child’s social security card
- A copy of the parent’s government ID card or driver’s license
- A copy of a bank statement or bill with your name and address
Most requests are confirmed within three business days. After you freeze your child’s credit continue to protect your child’s SSN and watch out for mail addressed to them as credit card fraud is only one form of potential identity theft.
How a Credit Freeze Impacts Your Credit
Freezing your credit does not impact your credit. You can freeze and unfreeze your credit as many times as you’d like free of charge and without negative credit impact impacts. Your credit score can still change with your existing accounts and factors such as on-time or late payments and existing credit information from the lender.
“This is not going to affect your current credit card accounts in any way. You can use your cards as normal,” he explained. “And unfortunately, you can still experience fraud on existing accounts.”
Rossman recommends getting one credit report from one bureau every for months to review any changes because credit freezes do not prevent fraud or identity theft on existing accounts. Each credit bureau offers one free credit report annually. To get free credit reports from each bureau, visit annualcreditreport.com. Don’t request all three credit reports at once because you’ll likely want to be able to see any changes over the course of the year. Also, consider signing up for self-monitoring services such as Credit Karma for regular credit alerts. You won’t receive a full credit report, but you’ll be notified of new accounts and credit score changes.
Unfreezing Your Credit Report
If you freeze, or lift, your credit but need to use your credit report for any reason, remember to unfreeze it because lenders cannot review your credit when it’s frozen. You can also place temporary lifts to unfreeze it for a certain time frame. Also, remember to unfreeze your credit from each of the bureaus individually, and you can freeze it again anytime for free. By law, if you request to unfreeze credit, it should be lifted within one hour by the bureau, but sometimes things don’t work as planned.
Rossman shared, “Don’t assume that things are going to work that smoothly because things often don’t. I’d try to build in a day or two on lifting just in case you run into any problems.” Factor in potential problems such as failed login attempts and website connection issues. If you freeze your credit from Equifax and Transunion, you’ll be able to easily unfreeze without a PIN within an hour. You’ll only need the username and password created for Equifax and TransUnion secure sites. But if you use the PIN given by the bureau, it’s important to not forget it as retrieving it can be difficult during unfreezing.
“While there is a way to track your pin if you lose it, it’s not easy,” Rossman shared. If you lose your Experian-issued PIN, visit the Security Freeze Center, request a new PIN and provide the requested documentation to verify your identity. You may also call 1-888-397-3742 to have a PIN reminder and instructions mailed.
Running the Risk of Not Freezing Your Credit
If you choose not to freeze your credit, Rossman recommends other fundamentals including checking both your report and score regularly for any suspicious activity or unauthorized changes such as new accounts.
“I think you should be checking that every four months. It’s not as good as freezing your credit because it doesn't prevent the fraud in the first place,” he said. “The score is just a number. Checking your report and score regularly is good, but not as effective as freezing your report. Nothing is going to prevent you on the front end as well as a credit freeze."
Remember, if you chose not to freeze or lock your credit there’s a higher chance of fraud and identity theft as your data and credit can be found by thieves.