Difference between revisions of "Credit freeze"

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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.<ref name = "FTC">[https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs Credit Freeze FAQs], from the Federal Trade Commission (FTC), September 2017.</ref>
 
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.<ref name = "FTC">[https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs Credit Freeze FAQs], from the Federal Trade Commission (FTC), September 2017.</ref>
 
{{Notice| Readers looking for guidance regarding the Equifax data breach should see: [https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do The Equifax Data Breach: What to Do], Federal Trade Commission, September 8, 2017.}}
 
  
 
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.<ref name = "FTC" />
 
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.<ref name = "FTC" />
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*[http://consumersunion.org/research/consumers-unions-guide-to-security-freeze-protection-2/ Consumers Union’s Guide To Security Freeze Protection], Consumers Union, viewed September 25, 2017.
 
*[http://consumersunion.org/research/consumers-unions-guide-to-security-freeze-protection-2/ Consumers Union’s Guide To Security Freeze Protection], Consumers Union, viewed September 25, 2017.
 
*[https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/ Credit reports and scores], from the Consumer Financial Protection Bureau. The basics of credit reports and scores.
 
*[https://www.consumerfinance.gov/consumer-tools/credit-reports-and-scores/ Credit reports and scores], from the Consumer Financial Protection Bureau. The basics of credit reports and scores.
*[https://krebsonsecurity.com/2017/09/the-equifax-breach-what-you-should-know/ The Equifax Breach: What You Should Know], Krebs on Security.
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*[https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do The Equifax Data Breach: What to Do], Federal Trade Commission, September 8, 2017.
 +
*[https://krebsonsecurity.com/2017/09/the-equifax-breach-what-you-should-know/ The Equifax Breach: What You Should Know], Krebs on Security, Sep 11, 2017.
  
 
==Forum discussions==
 
==Forum discussions==

Latest revision as of 21:09, 21 September 2018

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.[1]

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.[1]

A credit freeze does not

A credit freeze does not completely block access to your credit report, as certain entities will continue to have access.[1]

  • your report can be released to your existing creditors or to debt collectors acting on their behalf.
  • government agencies may have access in response to a court or administrative order, a subpoena, or a search warrant.

A credit freeze does nothing to prevent you from using existing lines of credit you may have (e.g. credit cards, loans, etc).[2]

A credit freeze also does not:[1]

  • affect your credit score.
  • 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.[3]

You'll need to supply your name, address, date of birth, Social Security number and other personal information.

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 (personal identification number) or password in a safe place. You will need it if you choose to lift the freeze.[1]

Exception: If you freeze your account online, the "big three" reporting companies will give you the PIN right away. Nothing will be mailed to you.[4]

Fees charged by state no longer apply

The Fair Credit Reporting Act (15 U.S.C. 1681c–1) was changed on May 24, 2018. Fees for placing and removing a credit freeze no longer apply after September 20, 2018.[5]

Credit reporting companies

Consumer reporting companies (also known as credit reporting agencies, or credit bureaus) collect information and provide reports to other companies about you. These companies use these reports to inform decisions about providing you with credit, employment, residential rental housing, insurance, and in other decision making situations.[6]

Consumer reporting companies must follow legal restrictions but generally can provide consumer credit reports and scores to an array of businesses, including:[6]

  • Lenders (including those that offer credit cards, home, payday, auto (including auto leasing) and student loans)
  • Employers and others such as government agencies (employment and background screening)
  • Landlords and residential real estate management companies (tenant screening)
  • Banks, credit unions, payment processors and retail stores that accept personal checks (check screening)
  • Companies that market and sell products and services to low-income consumers and subprime credit applicants, such as short-term lending and rent-to-own businesses among others
  • Debt buyers and collectors (e.g., medical debt collectors)
  • Insurance companies (health, life, property insurance screening)
  • Communications and utility companies (e.g., mobile phone; pay TV, electric, gas, water for utility bill repayment screening)
  • Retail stores for product return fraud and abuse screening; as well as retail stores that offer financing such as appliance and rent-to-own businesses, among others
  • Gaming casinos that extend credit to consumers

The Consumer Financial Protection Bureau (CFPB) publishes a comprehensive list which includes the three largest nationwide consumer reporting companies (Equifax, Experian, Transunion) and several specialty reporting companies that focus on certain market areas and consumer segments. The list is available here: List of consumer reporting companies (2016)

The CFPB list indicates which companies will supply free credit reports. Also note the disclaimer (page 5 footnote) which states this information is self-reported and has not been independently verified.

Below is a short list of credit reporting companies.

Credit Reporting Companies
Agency Website
ChexSystems
Equifax
Experian
Innovis
TransUnion
SageStream1
Notes:

1. SageStream, LLC was formerly known as IDA, Inc.

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.[7]

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.[8]

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.[1]

When temporarily lifting a freeze online, it gets done very fast; within 15 minutes or so, or maybe even instantly. This may apply to all agencies, but can be confirmed for ChexSystems and Equifax. (The 3 day delay may apply to when you make the request by mail.)[4]

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.[1]

Fraud alert

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

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.[1] In other words, additional verification of identity happens after they get the report, not before.[4]

Fraud alerts are less effective than a credit freeze, as responsibility for verifying your identity rests with the company requesting the report; not the credit reporting agency.[9]

Fraud alerts may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.[1]

Three types of fraud alerts are available:[1]

  • 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

You can place an initial fraud alert on your credit report online or by calling any one of the three big credit reporting agencies. The agency then must, by law, notify the other two agencies on its own. You can place the initial fraud alert whether you were a victim of identity theft or if you are just concerned about it.[4]

It is free to place the initial alert and it stays on your report for at least 90 days. You can renew it for free after 90 days any number of times. Be sure the credit reporting companies have your current contact information so they can get in touch with you.[4]

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.[10]

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.[11]

The most you can hope for is that credit monitoring services will alert you soon after an ID thief makes use of your stolen identity. That is, hopefully sooner then you might have discovered on your own by reading your free annual credit report.[4]

Free credit monitoring

Some services only monitor your credit report at one of the credit reporting agencies. So, for example, if your service only monitors TransUnion, you won’t be alerted to items that appear on your Equifax or Experian reports.[10]

If the credit monitoring service is free, monitoring is likely to only cover the agency you signed up with. The agency may offer monitoring of other credit reporting agencies for a fee.[12]

Notes

Some states let parents create a credit file for their child and then freeze it, while many states have no laws on the matter. Here’s a short primer on the current situation, with the availability of credit freezes for minors by state and by credit bureau. [13]

See also

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Credit Freeze FAQs, from the Federal Trade Commission (FTC), September 2017.
  2. The Equifax Breach: What You Should Know, from Brian Krebs, viewed September 16, 2017.
  3. Bogleheads® forum post: Re: Wiki article - Credit freeze, by forum member BigJohn.
  4. 4.0 4.1 4.2 4.3 4.4 4.5 Bogleheads® forum post: Re: Wiki article - Credit freeze, by forum member learning_head.
  5. Bogleheads® forum post: Re: Free to freeze and unfreeze your credit report, LadyGeek. May 25, 2018 and "S.2155 - 115th Congress (2017-2018): Economic Growth, Regulatory Relief, and Consumer Protection Act". Library of Congress. May 24, 2018. https://www.congress.gov/bill/115th-congress/senate-bill/2155/.
  6. 6.0 6.1 List of consumer reporting companies (2016),Consumer Financial Protection Bureau, 2016, Viewed September 16, 2017.
  7. Will Social Security's Identity Services Provider change my credit score or credit report?, from the Social Security Administration. Equifax is named here: Definition: Identity Services Provider.
  8. I have a security freeze on my credit reports. Can I still use Credit Karma?, from Credit Karma, viewed September 14, 2017.
  9. Blyskal, Jeff (September 13, 2017). "Security Freeze vs. Fraud Alert: Deciding the Best Option". Consumer Reports. https://www.consumerreports.org/consumer-protection/security-freeze-vs-fraud-alert-deciding-the-best-option/. Retrieved September 26, 2017.
  10. 10.0 10.1 Identity Theft Protection Services, from the Federal Trade Commission, viewed September 16, 2017.
  11. Should You Buy Credit and Identity Theft Monitoring, from NerdWallet, April 1, 2016.
  12. Bogleheads® forum post: Wiki article - Credit freeze, by forum member LadyGeek.
  13. The Lowdown on Freezing Your Kid’s Credit, from Brian Krebs, January 15, 2016.

External links

Forum discussions