More than 145 million consumers may have been affected by the recent Equifax data breach. Rightly so, the scale of this attack has led many Americans to take steps to protect their identities and financial information from criminal activity. One of the most effective tools to keep criminals away from your credit is a credit freeze. But it can also make things more complicated and expensive if you need quick access to new lines of credit. So how do you know if it’s right for you? Here are six things you should know.
What is a credit freeze?
Freezing your credit prevents people from seeing your credit report. While that makes it harder for a thief to open a new account in your name, if a lender can’t see your history it won’t approve a new loan. You will still be able to see your credit activity, and current creditors will still have access to your records. Most important, freezing credit will have no impact on your credit score.
Why should I freeze my credit?
If you think your personal information or Social Security number has been stolen, freezing your credit could prevent thieves from using your information to open new credit accounts in your name.
Why should I not freeze my credit?
What are your financial needs for the near future? Are you planning to buy a home? Will you need a new car? Will your child need student loans? If your credit is frozen, access to lending could take longer before the funds become available.
How do I freeze my credit?
Freezing your credit requires you to contact each of the three nationwide credit bureaus:
They will need your name, address, date of birth, Social Security number and other personal information. If you are a victim of identity theft, they may do this free of charge, but typically they charge fees ranging from $5 to $10. Each credit bureau will send you a unique PIN (personal identification number) or password, which you will need if you decide to lift the freeze.
How do I thaw my credit?
A freeze generally remains in place until you ask the credit bureau to lift it. Just like freezing it, you will need to contact all three bureaus again. This might take a few days and they will charge a fee, typically under $20, to thaw your credit.
What else can I do to protect myself?
A simple step is to request a fraud alert, which tells creditors to verify your identity before they issue you a new card or loan. It’s free and if you place an alert with one bureau they will notify the other two as well. It is important to note an initial fraud alert lasts ninety days. If you want the alert to last longer, you will need to reinstate the alert, unless the credit bureau offers automatic renewals.
Another important step is to regularly monitor your credit activity to have a better chance of catching thieves early. Keep an eye out for accounts you didn’t open and purchases you didn’t make. By law, you are entitled to a free credit report from each bureau once a year. This will tell you if you’ve had any credit inquiries that don’t look right.
The idea that an identify thief has stolen your personal information can be scary, disruptive, and incredibly stressful. If you are uncertain about what to do, let us know. As always, we are here to help.