This is a question that many people find themselves asking, especially with so many security breaches exposing millions upon millions of Americans’ vital information over the past year or so. The simple answer? Yes, as a recent report published by the consumer advocacy group U.S. Public Interest Research Group (USPIRG) found the best chance you have of protecting yourself from identity theft is to freeze your credit reports before your identity can be stolen. Before you run to the phone to call the credit bureaus, there are a handful of things you should know.
How does freezing my credit reports protect my identity?
As the USPIRG report says in its introduction, you are at risk of a data breach (and therefore, identity theft) if you pay taxes, have health insurance, go to college, patronize businesses that keep any kind of customer records, shop with a credit or debit card or work for the government or any other company. Essentially, by existing, you are sadly at risk for identity theft — that is the reality in today’s world. While there are many steps you can take to help protect your identity, such as shredding mail and documents with personal information before tossing them in the trash or refusing to give out your social security number whenever possible, the truth is that you are almost guaranteed to become a victim of identity theft at some point in your life.
A credit report freeze blocks your credit reports from being shared with any new potential creditors, such as banks or credit card issuers, or any company that requests to see it, such as cell phone or utility services. Since these creditors and companies can’t view the applicant’s credit reports, they will most likely deny an attempted new account from being opened — thus keeping you protected. By placing a credit freeze on your reports with all three of the major credit bureaus — Experian, Equifax and TransUnion — now, you can essentially block attempted identity theft before it happens, rather than simply being notified after it happens.
You might be familiar with another step you can take to protect your credit reports called a fraud alert and wonder how they are different. When you place an alert on your credit reports, businesses are required to verify your identity before issuing new credit by contacting you. Fraud alerts can be placed for up to 90 days, after which you’ll need to renew them if you want. If that’s something you’re worried you might lose track of, many identity theft protection services allow you to set up reminders so you know when 90 days is almost up. While a fraud alert can be helpful in the event that someone has misused your personal information, it doesn’t provide the airtight lock-down on your credit of a credit freeze.
What do I need to do to freeze my credit reports?
Placing a freeze on your credit reports is a fairly simple process. You’ll need to contact each of the three credit bureaus — Equifax, Experian and TransUnion — individually and supply a bit of personal information including your name, address, date of birth and social security number. The specifics can vary from state to state, so be sure you look to make certain you’ve got all the necessary information to apply for a credit freeze within your state of residence. You will also likely need to pay a small fee ranging from $5 to $10, although there are exceptions in some states for people over 65 as well as victims of identity theft who can provide a police report. Once your credit freeze has been processed, each company will send you a PIN or password that you should keep somewhere safe, as it will be necessary if and when you decide you want to unfreeze your credit reports.
Credit report freezes can be placed on the credit files of both minors and adults. Given that more and more people under 18 are becoming victims of data breaches, it’s not a bad idea to consider if you’ve got children who you think might become or have already become vulnerable. A credit freeze lasts until you elect to lift it or, in the case of a freeze put on a minor’s credit reports, until they turn 18.
Can my credit reports be unfrozen?
Yes, you can unfreeze or “thaw” your credit reports both permanently and temporarily, but keep in mind that it’s not an instantaneous process, and in some states you might have to pay a fee in order to lift the freeze. You’ll need to take this into consideration if you are planning to open a new account so you can be sure your credit reports are able to be shared by the time you apply. Also, don’t forget the PIN or password you were sent when you placed the freeze — without it, thawing your credit reports might take longer than usual.
What happens if I apply for a credit card or a loan with a credit freeze?
If you apply for a new account, such as a loan or credit card, while your credit freeze is still in place, the lender will not be able to access your credit reports. As a result, you will likely find yourself turned down from receiving any money. Keep in mind, many other types of services use your credit reports to prevent fraud — such as landlords and cell phone companies — so you will need to be aware of whether a frozen credit file will harm your chances of being approved before beginning an application for a new account.
Finding out which credit bureau your creditor uses to check applicants’ credit files can be useful, especially considering the three bureaus differ in how they process lifting a credit freeze. Experian and TransUnion will both allow you to grant specific creditors one-time access to your credit reports without lifting your credit freeze, which is far less of a hassle overall, while Equifax requires you to thaw your credit report entirely before creditors can have access. In the event that you (or an identity thief) try to open an account while your credit is frozen, the creditor will be notified that the credit file in question is frozen and therefore unavailable.
You might be contacted by the creditor and asked to have the credit freeze lifted, and if it’s a legitimate account you are trying to open, you can go ahead and submit the request to do so either permanently or temporarily. There is a chance you could find yourself denied outright if you apply without lifting your credit freeze, so it’s important to factor in at least one week to be sure it’s been lifted before applying for a new credit card or some other type of account. In fact, you may want to consider aiming for two weeks, just to be safe.
Finally, don’t forget to reinstate your credit freeze after you’ve finished applying and know you won’t need to provide access to your credit reports anymore.
Can I still use a credit report monitoring service?
If you would like to use a credit report monitoring or identity theft protection service, you can still do so even if you have put a freeze on your credit reports; however, you might consider whether it is worth the cost. It doesn’t hurt to take advantage of free credit and identity theft monitoring services offered to you in the wake of a data breach. They are, after all, free. However, it’s important for consumers to remember that these services cannot prevent identity theft or fraud, which was confirmed by the USPIRG report, but instead alert you to it after the fact. Additionally, with a credit freeze in place, you will not be able to receive updated credit reports since they are unavailable. However, your peace of mind in this situation comes from knowing new accounts can’t be created, and you will still receive alerts to changes in your credit scores. It also doesn’t hurt to take advantage of the identity theft aspects of an identity theft protection service, such as Internet black market monitoring, identity theft restoration specialists and the identity theft insurance.
Taking drastic steps such as a credit freeze might seem unnecessary, but it’s sadly something that experts are insisting on lately as the best method consumers can use to protect themselves against identity theft and fraud. To learn more about identity theft and how to avoid becoming a victim, you can follow our blog for tips and more information.