You can now put a security freeze on your credit reports for free at the three main credit bureaus. It is a rather painless exercise. I recently did it and it took about 20 minutes with one hiccup (described below).
Although it’s yet another thing you have to do, please don’t suffer from “optimism bias,” which means you don’t think identify theft will happen to you.
Even if you have poor credit or little wealth, you can still be an attractive target for identity thieves and other fraudsters. And having to correct or clean up from your stolen identity can be such a hassle.
And while you are freezing your reports, why not grab your free annual credit report to make sure nothing is amiss.
In the wake of the large massive security breach by Equifax and countless others, Congress enacted legislation that was effective on September 15, 2018, that allowed consumers to put a security freeze on their credit reports for free. Before then you had to pay to freeze your credit report.
You’ll create a login and password at each site and then be able to turn the freeze on and off as necessary when you apply for credit or need to start a new utility or complete a lease application. Thaws are effective within the hour.
A security freeze makes it harder for criminals to steal information from you to open fraudulent new accounts or borrow money in your name.
The three main credit bureaus house records of your accounts and payment history, which lenders, insurers, landlords and others use to decide whether you are likely to pay your bills. If you freeze your credit file, the bureaus will not give information to lenders unless you “thaw” the freeze first.
They will, however, still provide information to financial companies with whom you do business or to whom you owe money (existing creditors). Federal, state, and local law enforcement can still look at your credit reports as can any person using the information in connection with getting insurance, or background screening for housing or employment.
Here are a few tips on what to expect when you place a security freeze on your credit reports.
1. Use these links to the three credit bureaus.
Equifax: Create a login and password and choose “myEquifax” to manage your security freezes. You are not required to create a Personal Identification Number (PIN).
Experian: I was initially confused between the credit lock and the security freeze. You want the freeze and not the credit lock. You must pay for the credit lock.
I had placed a security freeze on my Experian credit report at some point before (I can’t recall) so I couldn’t complete anything online. Experian provided a number to call and I found I had indeed frozen my report. You still need a PIN to unfreeze your credit report.
TransUnion: This site was the easiest to use and set up the freeze. I was not required to create a PIN.
2. Don’t be fooled by a credit lock.
All three bureaus sell credit locks. Unlike the security freeze, you pay for a credit lock. It is not worth it. Better to stick with the security freeze and save the money.
3. Fraud alerts can help.
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.
To place a fraud alert on your credit reports, contact one of the three credit bureaus or do it while you are putting a security freeze on one of your credit reports. A fraud alert is free. The credit bureau you contact must tell the other two, and all three will place an alert on their versions of your report.
Fraud alerts and security freezes are not mutually exclusive. You can do both.
4. Creating a Social Security account.
You need to unfreeze only your Equifax credit report if you are creating an account at Social Security to get your benefit statement. Once you’ve created the account, you can freeze your Equifax report. The freeze does not affect any Social Security benefits you are receiving or will receive.
5. Consolidate and simplify your finances.
One last tip is to consolidate your accounts – banks, credit cards, brokerages, old 401ks, etc. This way it is much easier for you to monitor your own accounts.
If you are ever hacked, it is not that hard to fix and you don’t have to deal with a lot of providers.
As for your credit cards, just don’t close your oldest card (or else it may affect your credit score). And if you do close some of your credit cards, ask your one remaining credit card issuer to raise your limit so that your credit score is not adversely affected. See more here about credit scores.