Consumers nationwide can now place credit freezes for free. Here’s everything you need to know…
Credit card fraud is rampant these days. Ask almost anyone you know, and they have likely been a victim either through a data security breach or even a skimming machine that was attached to something where they used their card and didn’t know.
While skimming has decreased, thanks in large part to chip-and-sign technology, online fraud is everywhere. Even the credit bureau Equifax had a massive data breach that put 143 million Americans’ credit information at risk.
The danger in a data breach is not just that one credit card you might have that could be at risk, it’s that your entire financial and credit history could be compromised, or your identity stolen, because of your consumer data being leaked or hacked online.
So, what is a consumer to do? Enter: The credit freeze.
What is a credit freeze?
Put simply, a freeze is like a lock on your credit, where no one has access to your credit history but you. If you want to give a company access to your credit history, you must have the “key,” which is a specialized PIN you give the credit agency. Once they confirm your PIN, they “unfreeze” your account to allow businesses and companies to view it.
For example, opening a new credit card, getting a new phone, buying a house, a car or most other major purchases, all require a credit check. If your credit is frozen, you would have to call each bureau to unfreeze your account to then apply for a loan or make a purchase. Under the old system, it could take up to three days and cost up to $30 in total once you contact and pay each bureau.
History of Credit Freezes
Back in 2003, when most of us thought the most egregious thing you could do on the internet was download pirated music, the state of California passed a law that allowed consumers to place a block on their credit reports with each of the three credit bureaus. It was the first state to do so, and it took years for credit freezes to take hold in most states.
Credit companies and automakers didn’t like the idea of credit freezes because it limited a consumer’s impulse buying privileges. If a buyer’s credit was frozen, they couldn’t on a whim go into a dealership and purchase a car because they wouldn’t be able to run their credit in order to finance a purchase. If they were shopping, they couldn’t open up a credit card at the register and save 10 percent. These businesses fought off the idea of credit freezes in state legislature through lobbying. But they eventually lost the fight.
Because it was handled on a state-by-state basis, each state created their own rules and stipulations. Some states offered free credit freezes and unfreezes to everyone, while others charged a fee of up to $30, or $10 for each freeze or unfreeze.
Most states did offer free credit freezes to individuals who were directly impacted by credit fraud or identity theft. However, the individual would have to show more than just that their information had been stolen. Consumers were usually required to show that their identity or credit had been used to make purchases or open new accounts. The onus was on the victim, who had to file a police report and submit that as proof to receive the free credit freeze.
New Credit Freeze Law in Effect Starting September 2018
As identity theft hit a new high in 2018, a new law was passed called the Economic Growth, Regulatory Relief, and Consumer Protection Act. Among some of its other regulations, it states that all three credit bureaus must offer consumers credit freezes for free.
According to a 2018 study by Javelin Strategy and Research, more than 16.7 million individuals were victims of identity fraud in 2017, an increase of 8 percent over the previous year. Javelin defines identity fraud as not just access to your information, such as via a data breach, but using that information for financial gain.
Hackers and fraudsters have gotten more sophisticated, which makes the ability to easily freeze your credit report even more important. Part of the reason the law even came to fruition was the result of Equifax’s major credit breach that left so many vulnerable to identity fraud.
“There’s so much happening today in terms of data breaches — and there’s an importance to insuring people are able to access information about them,” says Rod Griffin, director of public education at Experian.
“This federal law makes things more streamlined, makes it uniform across the country and easier for people to understand how it works,” he says.
New free child credit freezes
The new law will not only allow free credit freezes but the ability to freeze your child’s credit report as well.
“Child identity theft is on the rise,” says Griffin. He explains that a child shouldn’t have a credit report at all, and if they do, parents should look into why. Experian offers a one-time service where people can look into whether their child has a credit report. If you happen to find something, they also provide free credit help, as well.
“For children, on average, the victim is about 12 when the fraud occurs, and they don’t find out until they are 16 or 18 years old when they are applying to financial aid and need credit,” he says. This is usually after the damage is done.
If your child does happen to have a credit report, you can have it frozen, or you can even have a credit report created and frozen if you desire, Griffin says.
Another benefit of the new law is the ease of creating a credit freeze. Each agency will have a web page on its site allows you to upload verification and set up a credit freeze immediately. This kind of technology also means you can unfreeze it quickly as well.
“You’ll initially be issued a PIN number. Once you provide the PIN and we can match the identity, we can lift that freeze almost instantly,” Griffin says. At most, it should take about an hour or two.
Fraud alert vs credit freeze vs credit lock
Another part of the law is an extension of a fraud alert from 90 days to a whole year. A fraud alert differs from a credit freeze because it is not as strict. While a freeze stops anyone from accessing your credit without your permission to the credit bureau (through unfreezing), a fraud alert still gives companies access to your credit files. But it prompts them with an alert, asking them to have you answer select questions about yourself. They must ask you to confirm something like your phone number or address to verify your identity. Usually, a credit freeze will last either until you unfreeze it or for seven years based on the state in which you are in. But a fraud alert is only temporary.
Some credit agencies now offer a premium service that uses a mobile app to freeze and unfreeze your credit without the use of a PIN. These services are called credit locks, which is somewhat confusing because a credit freeze is essentially a lock. Again, the difference here is in the ease of use, and a mobile app makes it much easier to “lock” and “unlock” your credit file almost instantly.
How to Freeze and Unfreeze Your Credit
Each credit reporting agency, Equifax, Experian and Transunion, has a different system for freezing and unfreezing your credit file. You have the option to call or write in by mail to have your credit frozen. Credit bureaus have also now introduced online freezes, which make the process much faster.
For written freezes, you may have to mail in documents, including copies of your driver’s license, passport, Social Security number and more. Then they will mail your PIN number back to you.
For phone calls, you will need to give your Social Security number and address.
Experian Credit Freeze
For Experian credit freezes, you’ll need to know the addresses you’ve lived in for at least the past two years. This can get tricky, especially if you are in college and move frequently, so keep that in mind. With all freezes, you’ll need your name with any suffixes, Social Security number, and birthdate.
PO Box 9554
Allen, TX 75013
- If you choose to overnight your documents for your credit freeze, mail to:
711 Experian Parkway,
Allen, TX, 75013
- Experian number: 888-397-3742
- Experian online: https://www.experian.com/freeze/center.html
Equifax Credit Freeze
To freeze your credit with Equifax, you’ll need your name, including any suffixes, your address, your Social Security number and date of birth. You may also need additional documentation, especially if you are mailing your information in.
Equifax Information Services LLC
P.O. Box 105788
Atlanta, GA 30348-5788
- Equifax number: 888-548-7878 or 888-298-0045 800-685-1111 (in New York, call 800-349-9960)
- Equifax online: https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp
Transunion Credit Freeze
Whether online or by phone, Transunion may ask you identification questions that include past addresses or even payment amounts on loans, so be prepared before you set up your freeze. Transunion also has many other products on its site that are not free, so be watchful to make sure you are signing up for a freeze only.
P.O. Box 2000
Chester, PA 19016
- Transunion number: 888-909-8872
- Transunion online: https://freeze.transunion.com/sf/securityFreeze/landingPage.jsp
Q:Do I need to freeze my credit?
“You shouldn’t freeze your credit file if you think it’ll prevent identity theft,” Griffin says. “It won’t. We don’t want to create this false sense of security that you don’t have to worry about your information anymore because your credit file is frozen.”
Griffin explains that most ID theft happens involves account takeover, where someone steals your credit card number. “Stealing doesn’t trigger a freeze,” he says. “It’s in the event that someone steals it and tries to apply for new credit.”
In other words, if you have a card that’s compromised, a freeze won’t prevent fraudulent charges. However, if someone gets their hands on your Social Security number, having a freeze in place will stop them from opening new credit in your name.
You also need to keep in mind that you’ll need to unfreeze your credit anytime you apply for new credit. And given that it still takes 1-2 days to unfreeze your report, you won’t be able to apply for credit impulsively. So, if you’re in a checkout line and they offer incentives to open an account, you wouldn’t be able to take the offer.
Then again, Debt.com’s founder Howard Dvorkin argues that may not be a bad thing.
“Opening new credit on impulse because it’s offered at checkout doesn’t give you time to thoroughly review the account and its features. You could end up with an account that has things like high APR or deferred interest. So, credit freezes can be beneficial, because it forces you to take time to consider a new credit line before you open it.