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Last week, the credit reporting agency Equifax announced that hackers had gained access to the data, including very sensitive information, of 143 million Americans. As a result, many American adults have taken radical measures to protect themselves from fraud and even possible identity theft — measures that include in some cases a credit freeze.
Whether signing up for additional credit monitoring services or freezing credit, the extra hassle can be a necessary step in protecting your information.
Before the data breach, it’s likely that not many people, even those otherwise well informed about credit, knew what a credit freeze was. What exactly does it mean? If you freeze your credit, does that mean you won’t be able to apply for any new credit cards until your account is unfrozen? And what does it take to freeze and then unfreeze your credit?
In short, it’s not too complicated a process.
Let’s start off with the basics. What is a credit freeze? The Federal Trade Commission defines a credit freeze as:
“Also known as a security freeze, this tool 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.”
In order to freeze your credit report, you’ll need to contact each of the three major credit reporting agencies, Equifax (1-800-349-9960), Experian (1-888-397-3742) and TransUnion (1-888-909-8872). There’s no impact on your credit score. There is a small fee associated with freezing your credit report, ranging from $5 to $10 depending on where you live, and you’ll need to give some personal information in order for the agency to proceed with the freeze. Once you’ve requested to freeze your report, each agency will send you a confirmation letter with a unique PIN or password. It’s vital you keep the PIN or password in a safe space, as it’ll be needed when you want to unfreeze your report.
Now that we have the basics out of the way, what exactly does a credit freeze have an impact on? According to the FTC, freezing your credit will not prevent you from getting your free annual credit report. In addition, it will not prevent a thief from making charges on your existing accounts. You’ll still need to monitor all bank, credit card and insurance statements for charges or unusual activity that you, as the account holder, did not make.
Most importantly for someone who’s thinking about applying for a new credit card: a credit freeze will not keep you from opening a new account, applying for a job, renting an apartment or buying insurance. But, there will be an added step. If there’s a freeze on your report and you want to do any of the aforementioned personal tasks, you will need to temporarily lift the freeze.
You’ll need to lift the freeze with each of the three agencies individually. When you call in to unfreeze your report for a temporary period, be sure to give them a specific time period or lift it to a specific party. Say, for example, you want to open a new credit card. If possible, contact the issuer to ask which agency (or agencies) it pulls your credit information from. Then, ideally, you’ll be able to call that credit agency (or agencies) and unfreeze your report for either a period of time or for the issuer that will be inquiring about your credit file.
The cost associated with unfreezing your report varies, so it’ll be best to ask each specific agency. In addition, each agency could have different lead times, meaning some might take more time to actually unfreeze your report than others.
Some other helpful information about credit freezes include the fact that you won’t stop receiving prescreened credit card offers. That is unless, of course, you opt out by calling 888-567-8688. In addition, while your report is frozen, your credit will continue to be available to some entities. For example, your report can be released to your existing creditors or to debt collectors acting on their behalf. In addition, government agencies may have access in response to a court or administrative order, a subpoena or a search warrant.
Thinking in the long term, when does your credit freeze end? In a few states, your credit freeze will automatically expire after seven years. In most cases, however, your freeze will remain in place until you ask the credit reporting agency for it to be removed.
Also worth noting about the Equifax data breach is that the company removed some controversial language from its terms and conditions. When the breach was first announced, Equifax offered users the possibility of signing up for free, for one year, for Equifax’s TrustedID Premier monitoring service — which gave rise to controversy, in turn, when it emerged that by doing so they may also have consented to waiving some of their legal rights, including that of joining a class-action lawsuit against Equifax.
Equifax has now removed from its site the language related to that possible waiver. In its place is a sentence that reads:
If you’re afraid your information has been compromised as part of the Equifax breach, freezing your credit could be a good precautionary measure worth taking. If monitoring your credit yourself seems like too tough of a task, the freeze option is a good way to ensure thieves won’t be able to open new accounts in your name. Plus, for points and miles enthusiasts, it’s a relief knowing a freeze can be temporarily lifted so it’s not necessary to turn away an attractive sign-up bonus.
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