Update #1 to below: As of September 21, 2018, free credit freezes (and thaws) are available to all Americans.
Update #2: the Equifax Class Action settlement details have finally been released and you have until January of 2020 to sign-up!
In light of the massive Equifax hack, their deficient response, and the subsequent consumer panic from the 147 million compromised Americans (read: everyone who has ever applied for credit) that has ensued, 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. Let’s first start with the basics.
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 (i.e. initial fraud alerts, extended fraud alerts, 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 1-800-349-9960
How Does a Credit Freeze Compare to a Credit Lock
I recently did an in-depth look at this. A credit lock is very similar, but there are some key distinctions (i.e. more consumer protections). 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?
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