Why This Needs to Be the Year You Freeze Your Credit Report
Have you ever worried about identity theft? It seems like every month or two, some mega retailer or company announces the latest data breach affecting tens of millions of Americans, putting them at greater risk of identity theft and fraud.
Whether you feel resigned to becoming a victim of identity theft or you feel helpless in protecting your identity, you need to take charge of your credit now.
1. Decide if a freeze is right for you, or just a fraud alert
2. Request a freeze from each of the three consumer reporting agencies
3. Consider freezing your child’s credit as well
4. Determine whether the convenience of a credit lock is worth the monthly price
Back in May 2018, the US Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act that gives all American consumers the right to “freeze” their credit reports with the three major consumer reporting agencies (CRAs): Equifax, Experian and TransUnion.
What Is a Credit Freeze?
A credit freeze means that the consumer reporting agencies cannot provide your credit information to anyone for any purpose until you request the CRA “thaw” your report. That means that even if someone has your name, social security number, and address, they will still be unable to open a fraudulent credit card account in your name.
If you have frozen your report and you want to apply for a card or loan yourself, you can grant a specific potential lender a one-time access to your credit report to permit that lender to check your credit history.
How to Freeze Your Credit
The reason that you are able to thaw your credit while an identity thief cannot (even if he or she has your social security number) is the PIN or account login information you set up when you freeze your credit reports for the first time. The process can take less than 5 minutes for each CRA, but you will have to request a freeze with each of the three CRAs. Here are the links: * Equifax: www.equifax.com/personal/credit-report-services (requires you to set up account with user ID and password) * Experian: www.experian.com/freeze (requires you to set up a PIN) * TransUnion: www.transunion.com/credit-freeze (requires you to set up account with user ID and password)
What about My Kids?
The 2018 federal law also allows you to place a freeze with the CRAs for your dependents 16 years of age or younger. If you freeze your children’s credit report, the law permits them to thaw their own credit themselves after turning 17.
Freezing your child’s credit goes a long way to prevent the possibility of identity theft now and in the future. Most minors who are victims of identity theft do not learn about the crime until they attempt to apply for their first loan or first utility or first cell phone account. The average identity theft victim requires nearly a year and a half and spends more than $1,000 to rectify the resulting problems.
What if, heaven forbid, something were to happen to you and any other adult responsible for your child? While many state foster care systems are taking steps to address the issue, children in foster care are far more likely to be victims of identity theft. Freeze your child’s credit now and you are providing some powerful identity theft protections for them in the future, just in case they need it.
What about Others for Whom I Am Responsible?
Additionally, the 2018 law permits you as the guardian or conservator for anyone who is incapacitated or a protected person to request a freeze on their behalf.
What Is a Fraud Alert?
If you have placed a fraud alert on your credit, you may think you have already frozen your report. This is not the case. A fraud alert adds information to your credit report that requires a potential lender to verify your identity before issuing a new line of credit (loan or credit card).
The Alert Pros: You only have to add a fraud alert to one CRA and it will notify the other two CRAs to place a similar alert. Additionally, instead of lasting for 90 days as was the case prior to the 2018 federal law, a fraud alert now stays on your credit report for one year.
The Alert Con: If a thief already has your identifying information, a fraud alert will not prevent him or her from opening an account in your name.
What Is a Credit Lock?
A credit lock essentially provides the same protection as a credit freeze. When you lock your credit, the CRA cannot provide your information to any potential lender.
The Lock Pros: A credit lock is convenient. You can freeze and thaw your credit with the swipe of your finger on your smart phone or the click of a button on your computer.
The Lock Cons: While the credit lock option is free with Equifax, you will have to pay for it with Experian and TransUnion as part of a monthly subscription service.
Whether you decide to take advantage of the free credit freeze or you go with an alert or lock, make sure you act now. Identity theft is a real and growing problem, and you do
not want to be stuck trying to repair your credit for the next year and a half when prevention is much easier now than it was before 2018.