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Freezing Your Credit: What You Should Know

If you’ve paid any attention to the news cycle this past summer, you’ve likely heard about some concerning happenings in the world of financial fraud. Recently, I wrote about July’s Capital One data breach, which actually coincided with a settlement between the FTC and Consumer Financial Protection Bureau, and Equifax; Equifax will be required to allocate at least $425 million in the wake of a credit breach in 2017 that widely affected American consumers. Credit card fraud is like a bogeyman in the night; it’s scary, it can be embarrassing (and financially devastating) when it affects us, and often we don’t even realize it’s there – so what can be done to prevent it? There are several options that are designed to protect you as a consumer, including credit locks and fraud alerts, but perhaps the easiest option to prevent credit card fraud is to freeze your credit.

What is a credit freeze?

When one (or all) of the credit bureaus restrict access to your credit report, it is called a credit freeze. Also known as a security freeze, this is the best way to prevent the release of your credit score and the detailed reports that credit reporting agencies send out whenever a creditor requests it during a credit card or loan application; it is a voluntary process, which means that you will have to contact the bureaus yourself before your credit can be frozen. While reviewing a credit card application (or loan application), if a credit issuer is unable to see your report, they will not allow you to open a new account. This is particularly useful because it makes it extremely difficult for an identity thief to open a fraudulent account in your name; thanks to this, a credit freeze is widely considered the strongest protection you can take against fraudsters in the event that your information has been compromised.

What is the Difference Between a Credit Freeze and a Fraud Alert?

A fraud alert is used to notify lenders to call you to verify your identity before extending new credit. It’s an extra step that is used to ensure that you are, in fact, who you say you are; fraud alerts are free, and do not affect your credit score. Additionally, a fraud alert will not block access to your credit report, which is what sets it apart from a credit freeze or a credit lock. A fraud alert can last up to one year, unlike a freeze, which requires you to contact each credit reporting agency to lift. Additionally, a fraud alert only needs to be added with one credit bureau – they will notify the other two; in order to place or remove a credit freeze, you are required to contact each individual credit bureau each time. Experian recommends adding a fraud alert as a first step when you believe you are the victim of fraud, or you have noticed unexplained transactions or withdrawals, but cautions that you should consider a credit freeze as a greater precaution.

What is the Difference Between a Credit Lock and a Credit Freeze?

A credit lock is a security measure that puts a lock on your credit reports; it prevents creditors from accessing your credit report for most applications, but it won’t prevent your credit score from changing while the lock is in place, and it does permit creditors to see your credit report if they first verify your identity. A credit lock is actually a preventative program that you can sign up for from each of the three credit bureaus (Equifax calls it Lock & Alert, Experian bundles it with other services and charges a fee for it along with identity theft insurance and alerts, and TransUnion offers a service called TrueIdentity for free). The terms “credit freeze” and “credit lock” are often used interchangeably, and while they do offer similar protections, it’s important to note that there are several key differences between the two. Most notably, it’s easier to unlock a credit lock than it is to “thaw” a credit freeze. When you freeze your credit, you must contact each of the credit bureaus, at which point you are assigned a special PIN code; you’ll receive one for each credit bureau. To unfreeze your credit, you must contact each bureau again and supply them with the code that you received. If you have lost or forgotten your PIN, it will take longer to “thaw” your credit. Alternatively, with locked credit, you can unlock your credit report at any time, with very little delay, by using your computer or mobile device to access the credit lock programs you signed up for. You can unlock your credit for as long as you need to, then lock it again immediately, from the comfort of your home or directly from your phone. Essentially, while a credit lock provides more flexibility than a credit freeze, it is also not as secure. Most experts recommend a credit freeze, rather than a credit lock. Another big distinction between a credit lock and a credit freeze is that a credit lock is not governed by federal law, unlike a freeze. In fact, the service agreements from each credit bureau make it clear that there is no guarantee of uninterrupted service or error-free operation, with regards to a credit lock.

How Much Does It Cost to Freeze (or Unfreeze) My Credit?

Until recently, each time you froze or unfroze your credit, you’d need to pay a fee. Luckily, due to an increase in consumer concern due to a growing number of data breaches, the three major credit bureaus no longer charge any money to freeze or unfreeze your credit. All you’ll need to do is contact each of the three bureaus individually; bear in mind that each has a slightly different process. The Economic Growth, Regulatory Relief, and Consumer Protection Act became federal law on September 21, 2018 and is the reason that consumers can now freeze and unfreeze their credit reports for free whenever they’d like.

What Will I Need to Freeze My Credit?

In order to activate a credit freeze, you’ll need to have some personal information handy, as well as the website and phone number of each credit bureau (see the Resource section below). You’ll need to provide the following information:

    • Your full name
    • Your address
    • Your birth date
    • Your social security number

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“Lemony Snicket has ridden the rails, gotten off track, and lost his train of thought. His investigative research has been collected and published in books, including those in A Series of Unfortunate Events and All the Wrong Questions.”