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Free Credit Freezes Are Now Available

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Imagine you go to check your mail one day, and you get a large bill for a new credit card. Only you never opened that card. It’s a worst case scenario that is becoming more and more common. Identity thieves are stealing your personal information and using it to open up new credit cards and loans in your name. Once a fake account is opened, disputing the claims and shutting down the account can be a long, difficult process. But there is an easy way to avoid this.

What Is a Credit Freeze

When you want to open up a new line of credit or take out a loan, the lender will check the database of one or more of the three major credit bureaus. These credit bureaus, Equifax, TransUnion, and Experian, keep a record of your accounts and your payment history. Potential lenders use that data to determine how likely you are to pay your bills. That likelihood is recorded as a credit score and can affect your ability to borrow money or open a card, as well as the rates and limits of your loan.

A security freeze, often called a credit freeze, tells the credit bureaus not to release any information to a potential lender or credit card company unless the freeze has been lifted by the consumer. Without that information, no new loans can be made or credit cards issued.

In the past, some credit bureaus charged for freezing or “thawing” your account.

In some states and in some situations, freezes were already required to be free. But new legislation by Congress requires all freezes and thaws to be free. TransUnion and Equifax have already made freezes free. Beginning September 21, Experian will make them free, too.

Why Aren’t Credit Freezes Common

Despite their availability and the fact that is it now free to do, credit freezes have been slow to catch on. According to some polls, only 14% of cardholders have placed a freeze on their accounts. What these polls reveal is that many American suffer optimism bias, which is basically the unfounded belief that it can’t happen to them.

Unfortunately, that isn’t that case. It has been over a year since the massive hack of Equifax that resulted in over 140 million identities being compromised.  For reference, the 2014 U.S. census recorded about 245 million adults in the U.S. That means that over half of all adults had at least some part of their identifying information compromised.

So why do people think it can’t happen to them?

In 2017, over 16 million Americans–that’s 1 in every 15 adults–became victims of identity fraud, at a total cost of over $16.8 billion. The belief that it can’t or won’t happen to you is simply false. 

It is very likely that at some point in your life your identity will be compromised.

However, there is a big difference between a criminal acquiring identifying information about you and becoming a victim of identity fraud. There are concrete measures that you can take to make it harder for criminals to steal your money and accounts, even if they have your personal information. When it comes to stealing your money, freezing your credit report is one of the best ways to prevent identity fraud.

(In a recent post, we also talked about another form of identity fraud in which thieves hijack your cell phone account and use it to access your financial accounts. Click here to learn how to prevent it.)

How to Freeze Your Credit

New legislation has made it free to freeze and unfreeze your credit. If you do it by phone or internet, credit bureaus are required to freeze your credit within one business day and unfreeze it within one hour of your request. You can also unfreeze your report temporarily to open a new card or take out a new loan, then quickly refreeze it.

Here are some direct links to freeze your credit at the three major bureaus:

TransUnion: transunion.com/credit-freeze

Experian: experian.com/freeze/center.html

Equifax: www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp

There is also another, less well-known bureau that you should know about. The National Consumer Telecom and Utilities Exchange is a database used by some cell phone, pay tv, and utility companies when you apply for a new account. In some cases, consumers have had fraudulent cell phone accounts opened in their name even after freezing their credit at the three major bureaus.

To freeze your credit with the N.C.T.U.E., visit www.nctue.com/Consumers.

What to Do If Your Identity is Stolen

Despite your best efforts, it is possible that your identity may be stolen. In that case, there are a number of steps you will need to take to resolve your accounts and stop the damage. The Federal Trade Commission has a site that will help walk you through the steps at https://identitytheft.gov/.

Don’t become a victim of identity theft and identity fraud. At TrustDALE we suggest freezing your credit as a precaution. Also, make sure to monitor your credit cards for any unusual charges. Most credit cards will let you set up automatic notifications for charges over a certain amount. For cards you almost never use, set the notification amount to $1, so you are notified of any activity. It’s a dangerous world, but you can make it safer if you take the right precautions.