Because of new law signed last May by President Trump, credit freezes are now free at all three credit bureaus. The freezes formerly cost $10 per bureau.
Once a report is frozen, it must be thawed and credit “thaws” also used to cost $10 per bureau, making the cost of a credit freeze $60 for a single freeze/thaw cycle. The new law took effect September 21, 2018 and was part of the Dodd-Frank Act. Before the law took effect, Equifax and TransUnion had already quietly waived the fees, but because of the law, Experian must now also offer credit freezes/thaws for free.
What is a credit freeze?
A credit freeze essentially blocks a lender’s access to your credit report. If you are having issues with identity theft, a credit freeze will essentially block a lender from reviewing your credit report information. Without access to your credit report, a lender will not issue new credit, so no new accounts can be taken out in your name. Since different lenders use different credit bureaus, or all three, In order to effectively freeze your credit, you need to freeze your credit reports at each of the bureaus: Experian, Equifax and TransUnion.
A credit freeze will not block existing creditors from looking your credit report, nor prevent you from reviewing your own credit report at websites like annualcreditreport.com. Annualcreditreport.com is where consumers are allowed pull their credit report for free once per year.
See this article for more information on credit freezes.
Other Credit Report Protections
There are different types of security measures you can take with your credit reports, some of which are not free.
You can also do a credit “lock.” A credit lock is essentially the same as a freeze, but is supposedly easier, as the lock or unlock process happens instantly. The other difference is that a credit lock costs money at Experian. Like a freeze, you must do the lock at all three bureaus for it to be effective.
Here’s where the gotcha comes in: service agreements for each bureau make it clear that the companies don’t guarantee error-free operation or uninterrupted service. The protections of a credit freeze are mandated by law and can offer better protection.
While all three locks can be done with the aid of an app, there are differences. Experian bundles its lock with another credit report service and charges $9.99/month. It also requires that you waive the ability to enter into a class action lawsuit and mandates arbitration. Equifax and TransUnion do not require you to waive your right to sue, though TransUnion requires you to opt into advertisement of various credit products.
Another type of protection is a fraud alert, which requires credit bureaus to contact you to verify your identity when a company requests your credit file. This isn’t a fool proof system. Under the new law, initial fraud alerts must last for one year once established. Advantages: fraud alerts are free. One other advantage: with a freeze, you must initiate at freeze at each credit bureau, meaning you need to go through the process 3 times and maintain 3 separate PINs. With a fraud alert, placing the alert at one credit bureau automatically places the alert at all three bureaus.
To remove a fraud alert, Experian and Equifax requires that you notify them in writing and submit copies of proof of identity. TransUnion has an online system to remove the fraud alert.
You can have both a credit freeze and a fraud alert on your credit report simultaneously if you want to make your credit report as tamper-free as possible.
With credit monitoring, the consumer is sent alerts when something on their credit reports change. All of the credit bureaus offer this service at a price, though there are some free ways to get credit monitoring. For instance, if you sign up to a website like Credit Karma or have a credit card from a major bank, you are often offered credit monitoring for free. Paying for credit monitoring is not really a good idea. It’s like finding out your home has been robbed and the thieves have already made off with all the loot — doesn’t really do you much good. It just allows you to know there is a problem and take steps to fix the damage, not prevent it in the first place.
Should I do a credit freeze?
Since there is absolutely no cost for doing so, some experts recommend doing the credit freeze permanently, only thawing when you know you are going to apply for new credit. The only things you will have to remember are your PIN (which you are required to create at the time of freezing your credit), and to give the process ample time to thaw your credit file. The process of thawing is supposed to take an hour, but really you should give it three business days so you are not left in the lurch when trying to obtain new credit. Also, since it’s impossible to predict which bureau the lender will use, you will need to initiate the thawing process at all three credit bureaus, then freeze them again when the process is complete.
Even with the well-known Equifax hack which happened in 2017, where millions of American consumers were affected. many consumers did nothing to protect themselves from this potentially serious personal security breach. According to the New York Times, the University of Michigan interviewed 24 people who knew about the breach and its serious nature and found that none of them had taken any steps to protect themselves. These consumers suffered from what the researches called “optimism bias,” which is to say that the consumers believed nothing could really happen to them. In other cases, people with poor credit assumed that because their credit was so terrible, no identity thief using their information would be offered credit. Such people often wake up to unwelcome surprises when reviewing their credit files.
The new law also required that credit bureaus allow parents to freeze their children’s (age 16 and younger) credit reports. Children are commonly the target of identity thieves as their Social Security numbers are untarnished — unused and have no credit data. A person under the age of 18 cannot legally enter a contract without a parent’s permission, so typically, children do not open credit accounts and often a child’s credit report is not reviewed with the frequency as an adult’s. This makes the situation ripe for taking the information and running with it. If the information is obtained early enough in a child’s life, the identity thief could potentially operate for 10 years without being detected.
Where to place a freeze:
• TransUnion: Visit TransUnion.com/credit-freeze. The company also has a free-freeze mobile app called myTransUnion, available at the Google Play Store and the Apple App Store.
• Equifax: Visit https://www.Equifax.com/personal/credit-report-services/. Or call its automated line at 800-685-1111.
• Experian: Visit www.Experian.com/freeze. Or call 1-888-EXPERIAN (1-888-397-3742).