October 2, 2018
• 5 Minute Read
Over the last decade, Americans have endured one security breach after another — often with dire consequences. The Target data breach, Home Depot data breach, and massive Equifax data breach may have dominated the headlines, but hundreds of other data breaches have led to millions of consumers having their sensitive personal information compromised.
While many people have kept an eye on their credit by signing up for free credit monitoring or paying for an identity protection service like LifeLock, there has been another option on the table for some time now — freezing your credit. Through a credit freeze, Americans have had the opportunity to stall their credit and make it unavailable to anyone who tries to open an account in their name.
Freezing Your Credit is Finally Free
A few problems have plagued consumers who may have wanted to freeze their credit reports up until now. The first one is the effort required since consumers have to freeze their credit with all three credit reporting agencies — Experian, Equifax, and TransUnion. The second has to do with cost; while not expensive, it has historically cost consumers $3 to $12 to freeze their credit reports with each credit reporting agency.
Fortunately, the cost of freezing your credit is no longer a barrier for consumers. While you still need to freeze your credit with each individual agency, doing so became free for consumers on September 21st, 2018 thanks to a new law that was implemented on that date — the Economic Growth, Regulatory Relief, and Consumer Protection Act.
This new law also makes credit freezes free for children in case you want to take preventative steps to protect your kids from identity theft. Finally, the Economic Growth, Regulatory Relief, and Consumer Protection Act makes it so fraud alerts on your account now last for a full year instead of just 90 days like they have in the past.
How Do Credit Freezes Work?
According to the Federal Trade Commission (FTC), a credit freeze is an action that “restricts access to your credit file, making it harder for identity thieves to open new accounts in your name.”
When you set up a credit freeze on your credit report, you are asked to select a PIN you can use each time you want to unfreeze your credit for some reason (e.g. you need to apply for a loan). Without the PIN, anyone trying to impersonate you or steal your identity won’t be able to get very far.
Credit freezes are important because they can stop identity thieves in their tracks. While they don’t protect you against fraudulent charges made on a credit card you already have, credit cards tend to offer zero fraud liability coverage that protects you from liability. Without a credit freeze, on the other hand, a crook could open a new line of credit in your name and you may not even know about it until it’s far too late.
As the FTC notes, a credit freeze does not affect your credit score at all; it simply locks your report up so nobody can pretend to be you and take out a loan. A credit report also won’t prevent you from getting a copy of your free annual credit report from annualcreditreport.com.
Finally, freezing your credit won’t prevent you from borrowing money if you need to take out a loan, apply for a mortgage, or finance a car. Once you place a security freeze on your credit report, you will only need to take the extra steps to unfreeze your credit with a PIN before you apply. Once you’re done, you can take steps to freeze your credit again.
Should You Bother Freezing Your Credit?
If you feel you are at risk for identity theft or simply want one less thing to worry about, freezing your credit report can be a smart idea. With a few simple steps, you could prevent anyone from opening a new account in your name. While the precaution may be unwarranted, you never know when this small step could protect you from endless heartache and stress later down the road.
While anyone can freeze their credit, here are a few signs you should seriously consider it:
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You don’t want to spend much time monitoring your credit report or bank accounts
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Your personal details or credit card numbers have been stolen in the past
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You’re not planning on borrowing money any time soon
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If you do need to borrow money, you don’t mind taking a few extra steps to unfreeze your credit first
Remember that, at the end of the day, there are plenty of benefits that come with freezing your credit and very few downsides. You will need to spend some time filling out forms to freeze your credit and set a PIN, but you can do it all online and on your own time. For that reason, there’s really no excuse.
How to Freeze Your Credit
If you do decide to freeze your credit report, each of the credit reporting agencies has made the process fairly simple. The first thing you’ll want to do is visit each credit bureau credit freeze page, which can be found here:
On each credit reporting agency website, you’ll need to enter the information they ask for including your address, legal name, Social Security number, and date of birth. You may also need to share previous addresses you’ve lived at or answer personal questions to confirm your identity. From there, you’ll confirm you want to freeze your credit report and select the PIN number you’ll use if you need to unfreeze it for any reason.
Once these steps are complete, your credit report will be frozen and inaccessible to hackers until you take steps to unfreeze it.
The Bottom Line
Freezing your credit report is a smart way to prevent identity theft and other types of fraud before they happen. Fortunately, the Economic Growth, Regulatory Relief, and Consumer Protection Act has made this action free for consumers with all three credit reporting agencies.
If you’re worried about your credit due to prior theft or want to make sure you’re protected from future data breaches, consider freezing your credit today.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.