You Can Freeze Your Credit for Free Beginning This Week

Sep 17, 2018

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A new federal law that eliminates the fees credit bureaus charge for freezing your credit is set to take effect Friday. The measure, a part of a larger financial bill signed in May by President Trump, requires consumer credit rating companies to fulfill your freeze request within one business day if made online or over the phone, or within three business days if the request was made via mail.

A credit freeze, also known as a security freeze, lets you restrict access to your credit report, making it difficult for scammers to open credit accounts in your name. “That’s because most creditors need to see your credit report before they approve a new account,” according to the Federal Trade Commission. “If they can’t see your file, they may not extend the credit.” Of course, freezing your credit also prevents you from opening accounts in your name — unless you lift the freeze.

Freezing your credit file does not impact your credit score. It also doesn’t prevent lenders from sending you prescreened credit offers. Further, some parties still will have access to your credit report, including existing creditors, debt collectors and government agencies that have won access via a court order, a subpoena or a search warrant.

In Response to the Equifax Breach

Congress approved the fee ban in the wake of the 2017 Equifax data breach, which exposed the personal information of more than 146 million Americans — including sensitive data that can be used to open credit accounts like Social Security numbers, driver license numbers, birth dates, addresses and names. Equifax offered free credit freezes following the breach, and, along with the credit bureau TransUnion, has already permanently dropped the fees, The New York Times reported. The third bureau, Experian, will begin offering free freezes by Friday.

Prior to the ban, the fee for freezing or thawing your credit ranged from $2 to $10 per bureau, depending on where you live. Free freezes were available only to people who could document they were victims of identity theft. Now you’ll be able to place, temporarily lift or permanently remove credit freezes for free no matter where you live.

The law also allows parents of children younger than 16 to freeze their kids’ credit for free.

Once the law takes effect, the FTC says it plans to provide a link from its identity theft website to each of the bureaus’ credit freeze websites. You can also contact each of the three major credit reporting agencies by phone:

  • Equifax (800-349-9960)
  • Experian (888-397-3742)
  • TransUnion (888-909-8872).

Once you’ve requested a freeze, each agency will send you a confirmation letter with a unique PIN or password. Keep the PIN or password in a safe space, as it’ll be needed when you want to unfreeze your report.

There’s one other identity-protection measure included in the new law. Free fraud alerts, which the bureaus used to set up for 90 days at your request, now have been extended to last one year at no charge. Unlike with credit freezes, you only have to ask for a fraud alert from a single credit bureau, which is then required to ensure alerts are established at the other bureaus, as well.

Placing an alert still allows creditors to gain access to your credit reports, “as long as they take steps to verify your identity,” the FTC says. “For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request.”

What You Can Do

Fraud alerts and credit freezes may stop someone from opening new accounts, a type of fraud that grew by 70% in 2017, according to Javelin’s 2018 Identity Fraud Report. You can check for signs that a new account has been fraudulently opened in your name by reviewing your credit reports. Get a free credit report once a year from each of the credit bureaus via AnnualCreditReport.com.

Still, credit freezes and alerts aren’t effective in preventing others from misusing your existing accounts, the type of fraud that traditionally is much more pervasiveTo help protect yourself from someone stealing your credit card credentials and going on a spending spree, for example, make sure to:

  • Regularly check your account activity.
  • Turn on two-factor authentication for websites that require a password.
  • Sign up for account alerts that will tell you every time a new transaction has been made.

Featured image by Mike Kemp / Getty Images.

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