How Credit Freezes Can Defend You From Identity Theft
Another day, another data breach. A recently-filed lawsuit alleges there was a massive data breach — we’re talking nearly 3 billion records — at National Public Data, which compiles information for background checks. The company confirmed the breach this week and said in a statement1 that names, email addresses, mailing addresses, phone numbers and Social Security Numbers were potentially leaked. Don’t write these breaches off with a shrug and a, “What can you do, right?” That’s exactly what hackers are hoping for.
In addition to checking your credit reports and financial accounts regularly for anything fishy, one of the best ways to protect yourself is with a credit freeze. That way, even if a hacker has all your information, they can’t do anything with it.
You can set up a credit freeze within minutes from each of the three of major credit bureaus: Equifax, TransUnion and Experian. The best part? It’s completely free.
Whether you receive a security alert from your bank or one of the various companies you’ve made purchases from, you’re going to want to know all the right steps to take to ensure your accounts are safe from fraud and identity theft.
So, before you commit to going off the grid or hiding out in a bunker in New Zealand, read this. We’ve got all the details you need to keep your personal information (and financials) safe with a credit freeze.
When Should You Freeze Your Credit?
Many people freeze their credit after their identities have been stolen, which is fine.
However, this means you’re basically in a race against the criminal: Who can get to your credit report first?
Steven Weisman, a Bentley University professor and author of the fraud and identity theft blog Scamicide, suggests freezing your credit now — and always.
He thinks of the tool as a “preventive medicine.”
“This is the single best thing someone can do to protect themselves from being a victim of identity theft,” he said. “Even if your Social Security number was in the hands of an identity thief, you’d still be protected.”
If you’d rather not put your credit on perma-freeze, then you should also consider it under the following circumstances:
- You’ve been the victim of a data breach. (At this point, that’s nearly all of us.)
- You believe you may have become a victim of identity theft.
- You want to protect your child’s credit.
Once your credit is frozen, you will still have access to your credit report, as will current creditors and debt collectors. Employers — current and potential — will have limited access to your credit report, as will some government agencies.
How a Credit Freeze Works
Credit Sesame defines a credit freeze as “a process which locks down your credit file and prevents identity thieves and cyber criminals from opening credit in your name.”
A credit freeze means your credit file is inaccessible to everyone except you, and your current creditors and debt collectors.
Creditors, such as banks and credit card companies, ask to see credit reports before giving the green light on opening any new accounts. Since they won’t be able to see your credit history, they won’t be able to extend you (or your hacker) a new line of credit. Makes sense, right?
And no, freezing your credit won’t negatively impact your credit score.
How to Freeze Your Credit
The first step is to request a security freeze from Equifax, Experian and TransUnion.
Each bureau has a slightly different process, but generally freezing requests don’t take more than a few minutes to complete and are processed in real time when made on the phone or online (but you should allow up to one hour to be on the safe side). When freeze requests are placed by mail, you should allow up to three business days for them to be processed.
Contact the 3 Major Credit Bureaus
You can freeze your credit by mail, phone or online. Remember: Equifax, Experian and TransUnion all say requesting a credit freeze by mail is the slowest method, and so if time is of the essence, you should consider requesting the freeze over the phone or online.
How to Freeze Your Credit With Equifax
- Online: equifax.com/personal/credit-report-services/
- Phone: 888-378-4329
- Mail: Equifax Security Freeze, P.O. Box 105788, Atlanta, GA 30348
How to Freeze Your Credit With Experian
- Online: experian.com/freeze/center.html
- Phone: 888-397-3742
- Mail: Experian Security Freeze, P.O. Box 9554, Allen, TX 75013
How to Freeze Your Credit With TransUnion
- Online: transunion.com/credit-freeze
- Phone: 888-909-8872
- Mail: TransUnion, P.O. Box 160, Woodlyn, PA 19094
Information You’ll Need to Freeze Your Credit
If you want to conduct a security freeze by phone or online, plan to have the following information handy:
- Your Social Security number
- Your birthdate
- A list of your most recent addresses
If you opt to request a credit freeze by mail, you’ll want to include the following information in your written request:
- Your full name
- Date of birth
- Social Security number
- Last two addresses
- One clear copy of a government-issued identification card
- One clear copy of a utility bill, bank statement or other form of proof of address
How Much Does a Credit Freeze Cost?
Credit freezes now cost nothing, thanks to the Economic Growth, Regulatory Relief and Consumer Protection Act, which became effective in September 2018.
Before the law’s passage, credit freezes used to cost between $5 and $15 to set up, with a second charge to unlock the freeze. (Victims of fraud were typically exempt from paying these costs.)
The law also allows you to unfreeze and refreeze your credit at any time, at no cost.
How to Unfreeze Your Credit
The time may come when you need to unfreeze your credit — say, to apply for a credit card or shop for a loan. To do so, go to the credit bureau’s website and use the credentials you set up to request the thaw.
The freeze should be lifted within an hour, as required by federal law. (If you choose to request your credit thaw by mail, your wait time will be considerably longer — at least three business days from the receipt of the request.)
You can also request to have the freeze lifted temporarily, which is especially helpful if you’re looking to rent an apartment or applying for a job, and then want to go back into lockdown.
Pros and Cons of Credit Freezes
The pros of having your credit frozen are pretty straightforward:
- It prevents anyone from opening new accounts in your name
- It won’t affect your credit score
- Best of all, it’s free
However, there are some possible pain points you should consider before requesting a credit freeze:
- Requesting and managing security freezes through three credit bureaus can be time-consuming
- You’ll need to lift the freeze if you want to apply for a new credit product like a loan or credit card
- It doesn’t protect your existing accounts
What Else Can You Do to Protect Your Credit?
A security freeze can be an incredibly powerful and effective tool to protect your identity and your credit, but you shouldn’t allow it to lull you into a false sense of security.
Here are a few more steps you should consider to ensure your credit — and your identity — are as safe as they can possibly be:
Fraud Alert
A fraud alert is a 90-day alert on your account that requires companies to contact you before offering new credit. For example, if you give the company your phone number, they are required to call to verify your identity before getting a copy of your credit report.
This is a free service. You only need to set up an alert with one of the credit reporting agencies, and the agency you set up the alert with will notify the other two.
Three types of fraud alert are available: fraud alert, extended fraud alert and active-duty military alert.
Credit Lock
A credit lock will block everyone, including you, from making changes to your credit file. This access is managed through a website or mobile app, and access is instant whenever you need to unlock your credit.
This option is also the most expensive, since you’ll need to request a credit lock from each individual credit reporting agency, and they all have slightly different subscription models for this service.
While Equifax offers this service for free, Experian charges $24.99 per month after your free one-month trial. TransUnion doesn’t offer a free trial and instead charges $29.95 per month for credit locks.
Review Your Credit Reports
You can request a free credit report from each of the credit bureaus once a year through AnnualCreditReport.com. Review your credit reports carefully when you get them, ensuring that no new accounts have been opened without your knowledge.
If you see anything that looks suspicious on your credit reports, make a note of it — you’ll need this information when you report the fraud and potential theft to the police and the Federal Trade Commission.
(You’ll also want to check to ensure no errors have found their way onto your report. It happens!)
Credit Monitoring Services
If you want to take it a step further, you can sign up for a credit monitoring service. We particularly like Credit Sesame, which gives you access to your credit report through TransUnion in the form of a “credit report card.” This credit report card explains your credit history in clear language, including tips and tools to help you better manage your credit.
Best of all, Credit Sesame offers free identity theft protection, which will alert you to important changes to your credit report, including when the next hackers steal millions of identities and try to open an account in your name.
When and How to Freeze Credit for Others
There may come a time when you need to complete a security freeze on someone else’s behalf. Here are some general guidelines for completing a credit freeze for someone else.
Your Child
Most minors under the age of 18 won’t have any existing credit reports. Unfortunately, that makes it that much easier for someone to fraudulently apply for a loan in their name. One way to protect your child from identity fraud is to set up a security freeze on their behalf.
Just as you would to set up a credit freeze for yourself, you’ll need to apply separately with each of the three credit bureaus (Equifax, Experian and TransUnion) online, by phone or by mail. While credit freezes can be set up fairly quickly when requests are made online or by phone, mailed requests can take up to three business days to process.
To submit a credit freeze request on behalf of your child, you’ll need:
- One piece of identification to prove your identity (such as a driver’s license, government-issued ID, Social Security card or birth certificate)
- One piece of identification to prove that you are the child’s parent or legal guardian (such as a copy of the child’s birth certificate, a copy of the court order, a valid power of attorney or a copy of a foster care certification)
- Multiple forms of identification to validate the child’s identity, which include a copy of the child’s Social Security card and birth certificate
Elderly or Disabled
Much as you would for a minor in your custody, there may come a time when you want to set up a security freeze for an aging loved one. If you suspect your loved one might be unable to regularly check their credit due to dementia or some other age-related illness, or that their personal information has been compromised, setting up a credit freeze is a good way to keep their finances safe.
Much as you would with a minor, you’ll need to provide documentation that proves both of your identities, as well as your relationship to each other.
Be prepared with the following documentation whenever you’re ready to request a credit freeze:
- One piece of identification to prove your identity (such as a driver’s license, government-issued ID, Social Security card or birth certificate)
- One piece of identification to prove your relationship to this person (such as a copy of the court order or a valid power of attorney)
- Multiple forms of identification to validate your loved one’s identity, which include a copy of the person’s Social Security card and birth certificate
Active Military
When spending prolonged periods of time abroad, it can make good financial sense to set up a credit freeze to avoid opening your finances up to any fraudulent activity. Unfortunately, unless you are legally responsible for someone (via a court order or power of attorney), you cannot freeze their credit for them.
The good news is that all three credit bureaus are now offering a free service called Active Duty Alert, which is a yearlong alert system for deployed active military members that notifies them whenever a credit request is made in their name.
These alerts can also be set up so that requesting parties are required to provide proof of identification (to further dissuade fraudulency). The best part? Once you set up an Active Duty Alert with one credit bureau, it’s required by law to notify the other two and have them do the same.
FAQ
No, freezing your credit will not hurt your credit score, but that doesn’t mean your credit score won’t change at all. Depending on how much debt you have and whether you’re making regular payments, all of these factors can influence your credit score and make it go up or down.
You can freeze your credit immediately by calling all three of the major credit bureaus (Equifax, Experian and TransUnion) and requesting a security freeze. You can also complete your requests online.
Yes, you can continue to use your credit cards normally during a credit freeze. Credit freezes don’t affect your existing credit lines; they just prevent you from taking out new lines of credit, such as new credit cards or loan applications.
Certain companies and federal agencies can still access credit reports, even if they’re frozen. This list of companies includes the three major credit bureaus, institutions conducting background checks on behalf of insurance agencies or employers, identification authentication companies (in cases of fraud investigation) and companies providing preapproved offers for new credit products.
The only major downside of freezing your credit is that you will have to unfreeze or “thaw” it again whenever you decide to apply for a new credit product (like a loan or credit card).
Larissa Runkle (@therealtorwriter) is a writer and editor living in Colorado. Her work focuses on personal finance, real estate copywriting and lifestyle guides.
