In light of new massive data hacks coming out seemingly every week, I wanted to dive a little bit deeper in to one specific proactive measure that readers can utilize to protect themselves from identity theft fraud – a “credit freeze”. You’ve likely been considering using a credit freeze, so I wanted to give the tool a 20somethingfinance breakdown and my take on whether or not you should use it. And, there’s good news for consumers: as of September 21, 2018, free credit freezes (and thaws) are available to all Americans.
What is a Credit Freeze?
A credit freeze, or credit security freeze, is when you instruct one of the 3 credit bureaus (Equifax, Experian, and TransUnion) to not release your credit report to a party that requests it, without your express consent. Without access to your credit report, a credit freeze effectively prevents companies from reviewing your credit history and then extending credit, loans, and services to someone using your identification (in effect, preventing fraudulent new accounts being opened with your identification).
Note that a credit freeze has no impact on your credit score or worthiness – either positively or negatively. It’s also worth noting that government entities and existing creditors or debt collectors can still access your credit reports. You can also personally access your report.
What is a Credit Freeze Lift?
What if you personally need to apply for credit, loan, or other situations where access to your credit report is needed, but a credit freeze is in place? When adding a credit freeze, you are provided with a PIN by the respective credit bureau which will be required in order to remove the credit freeze, either temporarily or permanently, which is called a “credit freeze thaw” (temporary) or “credit freeze lift” (permanently). A credit freeze lift or thaw can take multiple business days to process, which could slow down the application process for you.
Do Credit Freezes Automatically Lift After a Certain Length of Time?
It depends on your state. Some states have laws that require an automatic lift after 7 years, but most states have permanent freezes until you decide to lift the freeze.
The Pros of a Credit Freeze
There are a few big pros to a credit freeze:
- Credit Freezes Put you in Control: the ability to “lock the door” to new applications puts you more in control after a major data breach like Equifax, where your personal information is compromised. There is a sense of control, empowerment, and peace of mind that comes from this.
- Credit Freezes Proactively Prevent New Account Fraud: in many ways, a credit freeze goes a bit further than the other consumer credit protection tactics I highlighted in my Equifax hack protections post (e.g. initial fraud alerts, extended fraud alerts, and credit monitoring). A credit freeze is the only tactic that completely prevents new account identity theft fraud.
All of this sounds great, but…
The Cons of a Credit Freeze
Now that credit freezes are free, the only notable con is that Credit Freezes can be a Logistical Hassle. Implementing a freeze to your credit report can interfere with or prohibit timely approval of any legitimate subsequent requests or applications that you make regarding new credit, loans, services, or even an apartment rental or job application (an increasingly common part of the job application process). You’ll have to lift a freeze for those occasions. And, unfortunately, a credit freeze with one bureau does not extend to the other two bureaus – you must freeze and lift with all 3 bureaus independently.
How to Request a Credit Freeze or Lift a Credit Freeze
To request a credit freeze, temporary credit freeze lift (where you select the date to lift and re-freeze), or indefinite credit freeze lift, you’ll need to visit each of the following credit bureau sites:
- Experian: visit the Experian credit freeze site or call 1-888-397-3742
- TransUnion: visit the TransUnion credit freeze site or call 1-888-909-8872
- Equifax: visit the Equifax credit freeze site or call 1-800-298-0045
How Does a Credit Freeze Compare to a Credit Lock
I recently did an in-depth look credit freezes versus credit locks. They are very similar, but there are some key distinctions (e.g. more consumer protections and lower costs). If interested, take a look.
Should you Request a Credit Freeze?
I am very active with my credit card usage, so I am personally choosing not to use a credit freeze, and instead using free credit monitoring to keep a re-actively close eye on any suspicious activity.
That being said, there are a few situations where I would recommend a credit freeze to readers.
- You don’t often apply for credit, loans, switch jobs, or move apartments.
- You’ve already been targeted (which means you’ll probably be targeted again).
- You are really stressed out about the possibility of fraud.
In the third case, with the costs associated with freezing and lifting from all three bureaus, I can only recommend a credit freeze if you take the measures to do it for free. As noted, this requires you to submit an identity theft report with local law enforcement or the Department of Motor Vehicles, or be age 65 or older (you must provide proof of this). Check out the linked to bureau pages for more information on how to document this properly.
Have you implemented a credit freeze in response to the Equifax or another hack? Why or why not?
Timely article — thanks for raising awareness about this option. Looking around, credit freezes appear to cost around $10-$30, making a freeze at all 3 agencies $30-90. If I could freeze them free & instantly I probably would, but not interested in rewarding Equifax incompetence for getting hacked mid-May for a vulnerability that was published with a readily available fix in March. Doing similar monitoring to squash any apparent violations as they come up. Can you share what free credit monitoring service you’re using? I’ve been using one built into mint.com, but not sure if it’s vigilant enough to catch identity theft as opposed to generic monthly monitoring.
I use both Credit Karma and Credit Sesame for credit monitoring. Both are free. I haven’t tried Mint.com’s, but my guess is that it is probably similar.
I froze my credit last week in response to the hack. Both TransUnion and Experion charge $10 per person (most states were $10, some were $5 and some were free — it’s a state-by-state thing). Equifax isn’t charging anything to freeze your credit with them. So freezing your credit shouldn’t cost more than $20 per person.
I’ve found credit karma to be a decent, free service for credit monitoring. You can check your report as frequently as you like and get monthly emails about your score and if anything has changed. Might be worth a try.
Thanks for all the information you provided concerning the Equifax issue. We too monitor our credit cards and reports very closely, but decided to freeze our credit anyway. It just made sense to us since our information could now be out in the world forever. Plus, my wife and I are in our sixties, so we shouldn’t have a need for a lot of credit changes in the future. I would rather hassle with unfreezing when needed than to deal with my credit being stolen.
As you noted, when an account is frozen, current creditors still have access to your account. It’s my understanding this also includes changing your address, so I guess if someone was able to go through a current creditor they could change your address, etc?
And I’m having trouble talking with the bank’s employees about the freezing of credit…
Credit freezes can be costly and add complications for small business owners, particularly if you are a small business owner who is not far enough along in separating your personal credit from your business credit. Experian published an article on this recently on our Small Business Matters blog.
So, I went the freeze route after the Equifax ordeal and a few days later lost the paper my PIN number was on prior to entering it into my password software. I can’t seem to find good info into recovering or resetting this PIN to unlock or thaw! Has anyone else successfully navigated out of this situation? Looking for the most efficient route. Thanks!