By: Stella Katsipoutis-Varkanis
They say the best things in life are free. Now, one of the best ways to safeguard your personal information against identity theft is free too. A new federal law was set in motion on September 21st, allowing everyone in the United States to freeze and unfreeze their credit at all three major credit bureaus (Experian, Equifax and TransUnion) at no charge. In the past, consumers across most of the U.S. were required to pay anywhere from $2 to $12, per bureau, each time they placed or removed a credit freeze.
Lawmakers were spurred into action after last year’s massive Equifax data breach, which compromised the sensitive personal information (including Social Security numbers, birth dates and more) of about 148 million Americans. As a result, Congress amended the Fair Credit Reporting Act to make it mandatory for all credit reporting agencies to drop their fees for credit report freezes nationwide—for adults and children alike.
Because their credit profile is a clean slate, kids can be prime targets for identity thieves. Now, parents can rest easy knowing they can freeze their children’s credit free of charge too, as long as their kids are under the age of 16. (Check out the Federal Trade Commission website for more information about child identity theft.) Under the new law, you can also request a free freeze for someone else if you are their legal guardian/conservator or have a valid power of attorney.
Surprisingly enough, despite the fact that the 2017 Equifax breach put the identities of nearly half of the U.S. population at risk—and despite the strong encouragement from consumer advocates that people freeze their credit reports after the breach—not many consumers jumped onboard, citing the cost of freezes as one of the main reasons why they didn’t get one. According to a national study conducted by AARP this August, only 14 percent of the 2,000 people surveyed had actually frozen their credit reports. Now, consumer advocates hope the recent legislation and the newly dropped fees will be incentive enough for Americans to take advantage of the identity protection that credit freezes offer.
So if you haven’t already frozen your credit files, now is undoubtedly the right time to do it. Here’s everything you need to know before you take action.
When identity thieves get a hold of your personal information, they can use it to open loans, credit cards and financial accounts in your name. And if you don’t regularly check your credit report, chances are you won’t even notice the illegal activity until it’s too late.
When you freeze your credit, a restriction is placed on your credit report so that new lenders can’t access it. This helps prevent fraudsters from using stolen information to open new fraudulent accounts in your name. But because you can’t open a new account during a freeze either, you’ll have to use a personal identification number (PIN) to lift the freeze—or “thaw” your credit—if you want to make it accessible to new lenders. Once you’re done acquiring a new loan, you can opt to either re-freeze your thawed credit files, or leave them as they are (which isn’t recommended, since that would leave them unprotected). Again, both freezing and thawing your credit are free under the new law.
Keep in mind that, even when it’s frozen, your credit report can still be checked by the financial institutions and credit card companies where you already have existing accounts. You can also still check your own credit report without having to thaw it first. (You’re entitled to receive one free annual credit report from each of the three credit bureaus by visiting AnnualCreditReport.com.) Credit freezes also don’t affect your credit score, so you’ll have to keep making timely payments and demonstrating healthy credit habits to maintain your score.
Each time you wish to freeze or unfreeze your credit, you must contact each of the three credit bureaus—Experian, Equifax and TransUnion—separately. U.S. PIRG, a consumer advocacy group, recommends that you contact the National Consumer Telecom & Utilities Exchange too: They’re the credit reporting firm used by utility (e.g., gas and electric), and telecom (e.g., cell phone and cable) companies to check your credit when you open a new account with them.
After your initial freeze request, each credit reporting agency will give you a PIN that you will use every time you want to freeze or thaw your credit report in the future. Just make sure you keep track of all your PINs, and store the information in a secure place if you must keep record of it.
When you request a freeze online or by phone, the credit bureau is required to activate the freeze within one business day; if the request is made by mail, the freeze is enacted within three business days after your request is received. It takes about an hour for a freeze to be lifted, once requested by phone.
Therefore, if you know you’ll soon be shopping for a car or applying for a new credit card, make sure you contact each credit bureau to unfreeze your credit report several days in advance so it can be accessed by the lender.
You can use the following contact information to place your freeze or thaw request with each credit bureau:
In addition to credit freezes, credit bureaus offer various other credit monitoring products, such as fraud alerts and credit locks. While these do help protect your identity, they work a bit differently from a credit freeze, and they sometimes come at a price.
A fraud alert is a free service that will notify you when there is suspicious activity on your credit report, and it allows you to open a new line of credit without having to contact the credit bureaus to lift a freeze. However, it doesn’t restrict your credit report. Lenders can still access it, but they are simply asked to verify your identity before granting a new credit line to your name. So, theoretically, identity thieves can still try to use your information to open fraudulent accounts; you just might know about it sooner.
The new law passed on September 21st extended fraud alerts to last for one year once they’re requested. (It was previously 90 days.) Placing a request for a fraud alert with one credit bureau automatically enrolls you in fraud alerts at the other bureaus, so you don’t have to make separate requests for each. A fraud alert is convenient, and it might be a better option if you know you’ll need access to your credit report in the near future for a new car or apartment, for example. But just be aware that it doesn’t offer the same comprehensive level of protection offered by a credit freeze.
Some credit bureaus also offer a credit lock, which is not to be confused with a credit freeze. Credit locks work a lot like credit freezes, but they allow you to instantaneously manage your credit freezes through a mobile app. While credit locks may be marketed as a more convenient alternative to credit freezes, they are often a paid service.
Only Equifax and TransUnion offer free credit lock service. Experian, however, charges $4.99 for the first month of service and $24.99 a month after that. To fully protect yourself, you’ll have to lock your report with all three bureaus—meaning you’ll have to pay the fee. Another thing to keep in mind is that credit freezes offer protection that is backed and guaranteed by the U.S. law, while a credit lock is simply an agreement between you and the credit bureau. Their stringent legal protection and $0 price tag make credit freezes a more favorable option for many consumers; however, whether you’re willing to pay for a service you can get for free, for the sake of convenience, is a highly personal preference.
Again, it’s important to note that a credit freeze will protect you against identity theft, but it will not protect you from all types of fraud—such as having your existing credit card number stolen and used for fraudulent purchases, or being impersonated online and having your Social Security/checking/savings funds fraudulently claimed. If you decide to take advantage of now-free credit freezes, make sure you’re continuing to vigilantly monitor your existing financial statements, your Social Security account and your credit report for suspicious activity. VyStar members can also protect their existing accounts from fraud by enrolling in our FraudScout® Fraud and Credit Monitoring Services. For more information, please visit our Protection Center.
The information in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. VyStar Credit Union disclaims any liability for decisions you make based on the information provided.