With the plethora of Data Breaches over the past couple of years many consumers are considering placing Credit Freezes on their credit files. Initially it sounds like a quick fix to stop the threat of Identity Theft. But a closer look at how a Credit Freeze can impact your finances could make you think twice.
Let’s start with what a Credit Freeze does. Basically it allows consumers to “freeze” or block access to new lines of credit from being opened. To open a new credit account the credit files need to be “thawed”. This can be done by using the personal identification number provided by each credit reporting agency that blocked your credit.
Before that happens let’s look at how to place that Freeze. If you are a victim of actual Identity Theft and can provide a police report, you qualify for a free Credit Freeze. Also if you are 65 or older, there is no cost to initiate the block, but you may pay a fee to lift it.
Something to remember before “Locking Everything Down” is you may need to open a credit account in an emergency or an existing lender may need access your credit files periodically. Even background checks require access to your credit files. If any of those requests are made, before they can access your credit files, you will need to thaw or lift that freeze. Credit Bureaus differ in the time it takes to lift and how long it last. So be prepared.
Familiarizing yourself with each Credit Reporting Agencies guidelines will help lessen the inconvenience of placing, temporarily lifting or removing that freeze. Most CRA’s offer “online” credit freeze services.
For a complete list of fees and guidelines per state, review the Consumers Union’s Guide to Security Freeze Protection.
One alternative to the Credit Freeze would be to place a Fraud Alert instead. If you have not experienced any Identity Theft and don’t want the hassle of a Credit Freeze, Fraud alerts offer notification of new lines of credit and a request the credit issuer to verify the applicant prior to the account being opened.
The Fraud Alerts are available at 90 day or 7 years (victims of fraud). They offer free reports to monitor your credit activity. Also, if you order an Annual Credit Report and renew your fraud alerts you’ll have plenty of access to your credit file to monitor for Identity Theft.
Fraud Alerts are a shared between the CRA’s, report to one, the other two are updated. I recommend contacting each for your credit report, add a contact number and to Opt-Out of pre-approved mailings.
- TransUnion Fraud Alert
- Experian Fraud Alert
- Equifax Fraud Alert
Last but not least, don’t forget those ‘other’ credit reporting agencies. The Specialty Credit Bureaus they offer Fraud Alerts and Credit Freezes for credit accounts that have been impacted by Identity Theft.
For more useful information regarding Identity Theft, have a look at these other articles.
Mark is an ICFE CITRMS® Certified Identity Theft Advocate. His experience includes over 20 years in Financial Crimes, with his specialty (and his favorite) being his dedication to helping the victims of Identity Theft.