Credit freeze

A credit freeze, also known as a security freeze, lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name. That’s because most creditors need to see your credit report before they approve a new account. If they can’t see your file, they may not extend the credit.

If you’re concerned about identity theft, those reported mega-data breaches, or someone gaining access to your credit report without your permission, you might consider placing a credit freeze on your report.

A credit freeze does not
A credit freeze does not affect your credit score.

A credit freeze also does not:


 * prevent you from getting your free annual credit report.
 * keep you from opening a new account, applying for a job, renting an apartment, or buying insurance. But if you’re doing any of these, you’ll need to lift the freeze temporarily, either for a specific time or for a specific party, say, a potential landlord or employer. The cost and lead times to lift a freeze vary, so it’s best to check with the credit reporting company in advance.
 * prevent a thief from making charges to your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.
 * stop prescreened credit offers.

Placing a freeze on your credit report
You can place a freeze on your credit report by contacting each of the nationwide credit reporting companies listed below. Since the freeze is by Social Security number, you must make a separate request for each person, such as you and a spouse.

You'll need to supply your name, address, date of birth, Social Security number and other personal information. Fees vary based on where you live, but commonly range from $5 to $10. A comprehensive list of security freeze fees by state is provided by Equifax here (PDF).

After receiving your freeze request, each credit reporting company will send you a confirmation letter containing a unique PIN (personal identification number) or password. Keep the PIN or password in a safe place. You will need it if you choose to lift the freeze.

Each state has passed security freeze legislation setting the amount which a credit bureau is allowed to charge consumers for placing, temporarily lifting, or removing a credit freeze. In addition, numerous states have “Protected Consumer” groups, who can obtain a security freeze at reduced cost, or completely free.

A comprehensive list of security freeze fees by state is provided by Equifax here (PDF).

Credit reporting companies
Below is a short list of credit reporting companies.

Before you freeze your credit
Before freezing your credit, you should create an online account with the Social Security Administration. Your identity is verified by Equifax. A credit freeze will cause the identity check to fail.

If you are interested in monitoring your credit score with Credit Karma (or some other credit monitoring service), you should do it before freezing your credit, or you will need to lift the freeze in order to register your account. You can (re)freeze your credit after the monitoring account is created.

Lifting a freeze on your credit report
In a few states, credit freezes expire after seven years. In the vast majority of states, a freeze remains in place until you ask the credit reporting company to temporarily lift it or remove it altogether. A credit reporting company must lift a freeze no later than three business days after getting your request. The cost to lift a freeze varies by state.

If you opt for a temporary lift because you are applying for credit or a job, and you can find out which credit reporting company the business will contact for your file, you can save some money by lifting the freeze only at that particular company.

Fraud alert
A fraud alert is not the same as a credit freeze.

A credit freeze locks down your credit.

A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity. For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request.

Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.

Three types of fraud alerts are available:


 * Initial Fraud Alert. If you're concerned about identity theft, but haven't yet become a victim, this fraud alert will protect your credit from unverified access for at least 90 days. You may want to place a fraud alert on your file if your wallet, Social Security card, or other personal, financial or account information are lost or stolen.
 * Extended Fraud Alert. For victims of identity theft, an extended fraud alert will protect your credit for seven years.
 * Active Duty Military Alert. For those in the military who want to protect their credit while deployed, this fraud alert lasts for one year.

Placing a fraud alert
Three national credit reporting companies keep records of your credit history. If someone has misused your personal or financial information, call one of the companies and ask for an initial fraud alert on your credit report.

If you're concerned about identity theft, but haven't yet become a victim, you can also place an initial fraud alert. For example, you may want to place a fraud alert if your wallet, Social Security card, or other personal, financial or account information are lost or stolen.

An initial fraud alert can make it harder for an identity thief to open more accounts in your name. When you have an alert on your report, a business must verify your identity before it issues credit, so it may try to contact you. The initial alert stays on your report for at least 90 days. You can renew it after 90 days. It allows you to order one free copy of your credit report from each of the three credit reporting companies. Be sure the credit reporting companies have your current contact information so they can get in touch with you.

You may also want to place a fraud alert if your personal information was exposed in a data breach. A fraud alert is free.

Ask one of the three credit reporting companies to put a fraud alert on your credit report. They must tell the other two companies. An initial fraud alert can make it harder for an identity thief to open more accounts in your name. The alert lasts 90 days but you can renew it.

Credit Monitoring
Credit monitoring tracks activity on your credit reports at one, two, or all three of the major credit reporting agencies. Many companies refer to their services as identity theft protection services. What these companies offer are monitoring and recovery services. Monitoring services watch for signs that an identity thief may be using your personal information. Recovery services help you deal with the effects of identity theft after it happens.

Numerous credit cards and personal finance websites offer free credit scores, and basic monitoring services. If you’ve been a victim of a data breach, you’ve probably been offered a year of free identity-theft monitoring.

The most you can hope for is that credit monitoring services will alert you soon after an ID thief does steal your identity. But a better solution is to prevent thieves from stealing your identity in the first place (e.g. by filing a credit freeze).