One of the most effective ways of protecting your credit is with a security freeze. You might consider freezing your credit reports if you know or suspect your social security number has been stolen or you simply want to protect yourself from identity theft and credit card fraud. Interest in credit freezes spiked last year when Equifax, one of the three major credit bureaus, suffered a massive data breach which exposed 142 million social security numbers.
While it’s been several months since the breach, the victims of the Equifax data breach and similar breaches will never really be safe from identity theft. Since personal identifying information like social security numbers never change, criminals can use the information to open accounts at any time.
While you aren’t legally liable for charges stemming from identity theft, you do have to spend the time, money, and energy fighting the theft and preventing additional accounts from being opened in your name.
How Does a Credit Report Freeze Work?
A credit report freeze, also called a security freeze, is essentially a lock on your credit report. When your credit report is frozen, companies can’t pull your credit report for credit inquiries. That means any application that would require credit check would be denied. The credit bureau gives you a PIN or password to use when you need to temporarily unfreeze your credit report to make your own applications.
What It Takes to Freeze Your Credit Report
You have to freeze your credit reports with each of the credit bureaus separately. If you’re taking the route of freezing your credit report, you freeze your credit reports with all three of the major credit bureaus - Equifax, Experian, and TransUnion - for complete protection. This is important because businesses may check any of the three credit reports to approve an an application. If you only freeze your Experian credit report, for example, and the criminal uses your information to apply for an account with a company that uses TransUnion, they could succeed in opening an account in your name.
Unless you’ve already been a victim of identity theft, you’ll have to pay a fee between $3 and $15 (depending on which state you live in) to freeze your credit report. You’ll also have to pay an additional fee each time you want to unfreeze your credit report to make an application. It’s important to be aware of the cost associated with this additional protection. There typically is no fee to place a security freeze if you’ve had your identity stolen and you’ve filed a police report or another type of valid investigative report.
Keep in mind that it could take longer to apply for credit cards, loans, and other credit-related products and services. You’ll have to account for the time it takes to unfreeze your credit report, then make your application.
You can apply for a security freeze online or in writing (via mail). With both methods, you’ll need to provide enough information to verify your identity. This includes: your name, address, date of birth, social security number, a copy of a valid id, proof of address, and payment.
Here’s each credit bureau’s website where you can go to place a freeze on your credit report:
Alternatives to Freezing Your Credit Report
If a credit report freeze sounds like a more extreme measure than you’d like to take, you can place a fraud alert on your credit report. The fraud alert warns businesses to take extra steps to confirm your identity before granting credit. It’s not foolproof, because businesses can still check your credit report. The fraud alert is free and only lasts 90 days. You only have to place a fraud alert with one of the credit bureaus.
You can also monitor your credit reports through a variety of free credit monitoring services. You can order a full credit report each year from the credit bureaus by going to AnnualCreditReport.com. CreditKarma.com, CreditSesame.com, and WalletHub.com are three other free credit monitoring services you can use to keep an eye on your credit. Note that credit monitoring only allows you to respond to identity theft or other suspicious activity by giving you a heads up before a thief gets the chance to do a lot of damage to your credit.