Another day, another massive data breach.
Equifax, Capital One, Marriott … the list seems endless. And as more of our personal information is digitized, the risk of it ending up in the wrong hands rises, leaving us increasingly vulnerable to identity theft and trashed credit.
But while the scope of these data breaches can seem overwhelming (1.1 billion identities were exposed in 2016 alone), the reality is that you are not powerless. You can defend yourself, and you don’t have to go off the grid and hide out in a bunker in New Zealand.
One of the most powerful ways to defend yourself is a credit freeze. Setting it up is simple, and best of all, it’s free.
What’s a Credit Freeze?
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.”
Basically, access to your credit file is inaccessible to everyone except you.
Creditors, such as banks and credit card companies, ask to see credit report before opening new accounts. Since they won’t be able to see your credit history, they won’t be able to extend you a line of credit. Makes sense, right?
And no, it won’t negatively affect your credit score.
When Should You Freeze Your Credit?
Many people freeze their credit after their identities have been stolen, which is fine.
However, 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 “preventative medicine.”
“This is the single best thing someone can do to protect themselves from being a victim of identity theft,” he says. “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 — both current and potential — have limited access to your credit report, as do some government agencies.
What 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.
Prior to 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.)
This is the single best thing someone can do to protect themselves from being a victim of identity theft.
The law also allows you to unfreeze and refreeze your credit at any time, at no cost.
How to Freeze Your Credit
It will take a bit of legwork on your part. You’ll need to request a credit freeze from each of the three main credit bureaus: Equifax, Experian and TransUnion. Each bureau has a slightly different process.
1. Contact the Three Major Credit Bureaus
Have information like your Social Security number, birth date and most recent addresses on hand when you make your request. You can freeze your credit by mail, by phone or online.
How to Freeze Your Credit With Equifax
How to Freeze Your Credit With Experian
How to Freeze Your Credit With TransUnion
Note: All three credit bureaus 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.
If you do opt to request a credit freeze by mail, make sure to include your full name, date of birth, Social Security number, last two addresses, a clear copy of a government-issued identification card and a clear copy of a utility bill, bank statement or other form of proof of address.
2. Receive Your PIN and Keep It Safe
The credit bureaus will set you up with a PIN, which will allow you to manage your credit freeze.
Once you receive this number, make sure you keep it in a safe place where you can always find it. You will need to use it if you ever need to unfreeze — or “thaw” — your credit, like if you decide to apply for a mortgage or open a new credit card.
3. Manage Your Credit Freeze
Your credit freeze should be active one business day after you make the request online or by phone. (The time frame for mail requests is three days.) You can manage it by logging into the bureau’s site using the credentials you established when you requested the credit freeze. If you want to make any changes via phone or mail, you’ll need to have that PIN on hand.
How to Unfreeze Your Credit
Chris Zuppa/The Penny Hoarder
The time may come when you will 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 are looking to rent an apartment or applying for a job, and then want to go back into lockdown.
If you know which credit bureau your future landlord, creditor or employer will be contacting, you can save yourself some time by requesting the freeze be lifted for only that credit bureau.
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 credit freezes through three credit bureaus can be a pain.
- You’ll need to lift the freeze if you want to apply for a new credit product.
- It doesn’t protect your existing accounts.
What Else Can You Do to Protect Your Credit?
As we said earlier, a credit 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 — is as secure as it can possibly be:
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 must notify the other two.
Three types of fraud alert are available: fraud alert, extended fraud alert and active duty military alert.
A lock blocks everyone, including you, from making changes to your credit file. This access is managed through a website or mobile app, and access is instant if you unlock your credit.
This option is the most expensive: You must request a credit lock from each individual credit reporting agency, and each one charges a monthly fee upward of $20.
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, 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 your credit history to ensure no errors have found their way onto your report. It happens!)
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, a “credit report card” which explains your credit history in clear language, and tips and tools to help you 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 steals another 100 million identities and tries to open an account in your name.
Caitlin Constantine is the deputy managing editor at The Penny Hoarder. Staff writer Carson Kohler also contributed to this report.