For years now on our Simply Money radio show, we’ve been huge proponents of credit freezes. They’re one of the easiest ways for you to pro-actively protect your personal information from identity thieves. And now, they’re one of the cheapest ways. In fact, they’re free.
What’s a credit freeze?
A credit freeze is basically a way for you to ‘lock down’ your credit file so identity thieves can’t open new accounts in your name.
Previously, you had to pay a fee to all three credit bureaus (TransUnion, Experian, and Equifax) to do this, and fees varied by state.
Why are they now free?
In the wake of the Equifax data breach in 2017 that exposed the personal information of approximately 143 million Americans (remember that?), many people called on Congress to take action and force the credit bureaus to offer freezes for free.
And they did. This past May, Congress passed the ‘Economic Growth, Regulatory Relief, and Consumer Protection Act.’ So now, as of September 21, 2018, all credit freezes, no matter the state you live in, are free. Unfreezing your credit is also free.
As a reminder, the three credit bureaus don’t ‘talk’ to each other. If you want to freeze your credit, you still need to place a freeze through all three credit bureaus, separately.
Free credit freezes for you aren’t the only benefit coming out of this bill. Here are three others:
- ‘Initial fraud alerts’ will now have to last for an entire year. Previously, they lasted for just 90 days. This alert tells businesses running a credit check to contact you before opening a new account.
- Starting in 2019, the credit bureaus must start offering free credit monitoring to all active duty military members.
- You’re also now able to place credit freezes on a child’s credit file for free, up to age 16.
According to the Federal Trade Commission, almost 4% of all identity theft complaints in 2017 affected children and teens. While this might not seem too significant, this kind of identity theft can be much more damaging since it could go unnoticed for years.
We highly recommend placing a credit freeze on behalf any minor child of whom you have legal guardianship.
Important reminders about credit freezes
As with anything in the financial services industry, it’s important to separate fact from fiction. Keep the following in mind:
- A credit freeze is not a cure-all way to stop all identity theft. There continues to be other threats, such as tax identity theft, medical identity theft, synthetic identity theft, and the take-over of your current accounts. Simply put, you still need to stay vigilant in monitoring all your accounts.
- Freezing your credit does not impact your current lines of credit, such as credit cards.
- Once you place the three freezes, be sure to keep the PIN you receive from each bureau in safe place. You’ll need these respective numbers to freeze and unfreeze your credit in the future.
- If a creditor, lender or employer needs to run a credit check, you'll need to temporarily lift the freeze, so they can access your credit file.
- If you still need to create a 'My Social Security' account, your credit needs to be unfrozen. This either means you need to temporarily lift a current freeze you have in place and then create your account, or you need to create your account before you place a freeze for the first time. Once you've created your My Social Security account, you can still access it with a freeze in place.
The Simply Money Point
Control what you can control. While credit freezes aren’t going to stop all types of identity theft, they’re a great start for better protecting your information. And now since they’re free, there’s no excuse not to put them in place. Visit TransUnion.com, Equifax.com, and Experian.com to get started.