Credit Freeze: When & How to Do It
Although identity theft only happens to a fraction of us, the repercussions can be extremely severe and tedious to resolve. Thus, it is recommended that you consider preventive methods whenever possible. One such preventive measure is called a credit freeze. Freezing your credit – also known as “locking”, “sealing” or “securing” your credit – essentially means that you preclude your credit reports from being accessed by most third parties.
A credit freeze prevents fraudsters from using your personally identifying information to open financial accounts or make transactions that require a credit check under your name. In other words, it nips certain types of financial fraud in the bud, enabling you to avoid the monetary loss and potential credit score damage that often accompanies them. Below you can learn more about how a credit freeze works, how much it costs, and alternative measures for protecting your financial life.
How a Credit Freeze Works
Credit freezes or security freezes have become increasingly common in recent years and are now available upon request in every state, attesting to their effectiveness as a shield against identity theft. A credit freeze works by disabling most entities from accessing your credit report unless they are given your personal authorization, rendering it extremely difficult for any new and unwanted credit to be established in your name. More specifically, if you are requesting a credit freeze, you will pay a placement fee (ranging between $0-$30, depending on how many of your three major credit reports you decide to freeze) in return for a PIN from the credit bureaus. This PIN acts as an additional key and it must be given in order for your credit reports to be released.
As for permanently removing a credit freeze, you must provide them the PIN as well as pay a removal fee. If you are temporarily removing a credit freeze, you must also provide them with the PIN and pay a lift fee. In this case, you must also supply the credit bureau with the specific parties and/or set of dates you are lifting for.
It is also important to note that only you can request your own credit freeze, although now several states enable you to request one for your minor or protected consumer.
There are a few other integral things to note about credit freezes as well:
- It does not affect your existing lines of credit (in other words, you can still use your existing credit cards).
- Unlike a hard inquiry, a credit freeze does not impact your credit score at all.
- Despite being locked, there are several people who can still view your credit report. These are:
- The government
- Current creditors
- Collection agencies
How to Freeze Your Credit & How Much It Costs
In order to request or remove a credit freeze, you must contact the three major credit bureaus (Equifax, TransUnion and Experian) separately. They can be reached individually via their websites, by mail or by phone. Each of them will ask for your full name, address, date of birth, Social Security Number and other personal information as a way to verify your identity, so make sure you have those documents on hand.
|Website||Mailing Address||Phone Number|
|Experian||Experian Security Freeze
P.O. Box 9554
Allen, Texas 75013
|Equifax||Equifax Security Freeze
P.O. Box 105788
Atlanta, Georgia 30348
(NY residents please call 1-800-349-9960)
P.O. Box 2000
Chester, PA 19022-2000
There are up to four types of fees related to credit freezes that each bureau will charge individually:
- Placement fee: the fee for adding the credit freeze (it ranges from $0-$10).
- Permanent removal fee: the fee for permanently removing the credit freeze (it ranges from $0-$10).
- Temporary removal (lift) fee: the fee for lifting the freeze for specific parties and/or set of dates (it ranges from $0-$12).
- PIN replacement fee: the fee to replace the password given to you. This happens in instances when the PIN is compromised or lost (it ranges from $0-$10).
The fees vary between each bureau and depend on three factors: your state of residence, your age and your victim status (whether you have been a victim of identity theft before or not). If you have been a victim of identity theft, your fees are waived in every state and by every bureau. Contingent on a combination of these factors, your fees could range from being free to over one hundred dollars, depending heavily on how many times you lift your credit freeze (especially because the lift fees vary between each bureau). For the average non-victim who is under 65 years of age, they will pay between $15-$30 in total to place the freeze, $15-$30 in total to permanently remove the freeze, $6-$36 in total to lift the freeze each time and $5-$10 in total to replace the PIN each time (this fee has a lower total as Equifax is currently the only credit bureau that charges for replacement).
Each person is different, however, so please refer to each credit bureau’s respective website for specific details regarding your total fees.
Minors and Protected Consumers
In some states (such as Maryland, Delaware, Oregon, Wisconsin, etc.) and increasingly more, parents and legal guardians can opt to freeze the credit reports of their respective minors and protected consumers. It is vital to note that many minors lack credit reports to begin with, and therefore, cannot have their credit reports frozen. However, if they do have existing credit reports, parents and legal guardians can file credit freezes by contacting the three major credit bureaus and providing the following documents:
|Parent or Guardian||Minor or Protected Consumer|
|Full name, including any suffix (e.g. Jr., Sr., etc.)||Full name, including any suffix (e.g. Jr., Sr., etc.)|
|Full address||Full address|
|Copy of a Social Security Card, or a certified or official copy of a birth certificate||Copy of a Social Security Card|
|Copy of a driver's license, an identification card issued by the Motor Vehicle Administration or any other government issued identification, or a copy of a utility bill that shows name and home address||For minor: a certified or official copy of a birth certificate|
|For person under guardianship or POA: an order issued by a court of law, a lawfully executed and valid Power of Attorney, or a written, signed and notarized statement that expressively describes your authority to act on behalf of the protected consumer|
Pros and Cons: Should I Request a Credit Freeze?
Now that we’ve discussed the price to be paid for this extra blanket of protection, we have the ultimate question – is it worth it? Let’s have a look at the pros and cons.
- Protection: A credit or security freeze is indubitably an effective and easy way to protect yourself from identity theft. The consequences of having your identity stolen are tumultuous, time-consuming and temporarily costly on your wallet and credit score – making the credit freeze fees look small in comparison to the terrible alternative.
- Control: Not only can you place and lift a credit freeze whenever you want, but you’ll also have the peace of mind of knowing exactly who is accessing your credit report and when.
- Lack of Flexibility: It is important to note that placing a credit freeze is best for periods of time when you will not be establishing new credit. Additionally, if you are currently shopping for a new apartment or a car loan, both of which may require credit checks, perhaps now is also not the best time to freeze your credit.This is because the lift processing timescan take up to 3-5 business days which might delay any new credit applications or credit report checks if you do not time yourself generously.
- Cost: It is worthwhile to note that the lifting fees, when totaled from all three credit bureaus, can add up to a large amount if done consistently. Thus, try to avoid placing freezes on your credit reports from any of the bureaus during periods when you know you will have to lift them often.
- Existing Credit Vulnerability: Although credit freezes preclude new lines of credit from being added without your approval, it does not protect misusages of your existing lines. Therefore, you should still continue to closely monitor your current credit card, bank and insurance statements.
What Are the Alternatives to Credit Freezes?
Although freezing your credit is one of the best ways to preclude identity fraud, there are still several other alternatives you can pursue:
- Credit Monitoring: There’s no point in paying for credit monitoring. But that’s only because there are plenty of free credit monitoring services to choose from these days. That includes WalletHub. We’ll watch your TransUnion credit report 24/7 and tell you whenever there’s an important change. This may include new accounts being opened in your name, new public records or a change in your address. For the quickest response time, make sure to enable text-message alerts from your account’s settings page.
- Fraud Alerts: If you suspect you are a victim of fraud, please place a fraud alert on your credit file so it will notify anyone requesting your file (such as lenders, creditors, renters, banks, etc.) that you think you are at risk. They will then take steps to further verify that you have authorized the request to ensure your protection.
- Self-Monitoring: You have the right to view a free copy of each of your three major credit reports once every 12 months at www.annualcreditreport.com. It is important to track your credit history so always take advantage of this option.
- Other Cautionary Measures: There is a variety of other precautionary measures that you can take on a daily basis in order to protect your personal financial measures, such as shredding your financial statements, locking your mailbox and exercising caution online.
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