What is a credit freeze — & why?

Jeanine Skowronski


Jeanine Skowronski

Jeanine Skowronski

Former Head of Content at Policygenius

Jeanine Skowronski is the former head of content at Policygenius in New York City. Her work has been featured in The Wall Street Journal, American Banker Magazine, Newsweek, Business Insider, Yahoo Finance, MSN, CNBC and more.

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Back in October 2015, the Public Interest Research Group rolled out a paper suggesting everyone put a credit freeze on their credit reports to combat identity theft. At the time, it was an understandable, but seemingly impractical suggestion. Credit freezes block access to your credit report, so they're certainly an effective way of keeping fraudsters from opening up financial accounts in your name. But they're also ... how do I put this ... a pain in the ass. Unfortunately, thanks to Equifax's data breach from hell, the US-PIRG report feels downright prescient. Cuz everyone in the U.S. (yes, everyone) should be thinking about getting one right now.

What's a credit freeze?

Lenders and an assortment of service providers, including insurers, pull a version of your credit report when deciding whether they want to do business with you and at what price. A credit freeze effectively blocks them from doing that. No credit report, no loan, policy, apartment, etc. The upside there is a thief can't, say, walk into a bank and exit with a loan taken out in your name. The downside is, well, you can't exactly do that either.

If you're applying for a loan, you'll need to "thaw" your credit report at least temporarily or for a specific party. If you have your PIN on hand (the credit reporting agency provides this when the freeze is requested), that process can be fairly straightforward and quick - even as fast as 15 minutes. But if you don't have your PIN, it's gonna be a process. And there's usually a small fee associated with credit freezes, too.

The cost of a credit freeze

Per the US-PIRG, a security freeze costs between $3 and $10 at each of the big credit bureaus (Equifax, Experian and TransUnion), depending on your state. And, also state-contingent, a $2 to $12 fee, for unfreezing each one.

Now, a lot of states waive both of those fees ... for identity theft victims. (And, no, simply having your data stolen doesn't count. Generally, someone's gotta use it to commit fraud first, though Equifax is waiving its freeze fee now until November 21. Which, thanks, Equifax, I guess.) TransUnion actually has a great chart on its website outlining the credit freeze laws by state.

Do I really need a credit freeze post-Equifax breach?

If you went on Equifax's wonky data breach website and were told you were possibly compromised, then, yes, it's highly recommended. If you weren't, well, honestly, it's probably a good idea to get one anyway.

— & why?

Because Equifax has said the data breach involved Social Security numbers. SSNs are a virtual skeleton key for thieves. They can use one to open up new credit accounts, subsequently run up credit card bills, get medical care and steal your Social Security benefits and/or tax return, among a number of other terrible things. And those digits are very, very difficult to have changed. The Social Security Administration might be persuaded to give you a new SSN if you can prove a thief is using it ... but you'll notice the thief has to use it first, so by then, damage has been done.

Beyond that, Equifax is a credit reporting agency. It has some sort of information on virtually everyone. And data breaches have a habit of growing. Consider the formerly worst data breach in history: When Target first announced it had been hacked in December 2013, it put the number of affected customers at about 40 million. Fast forward to a few weeks later and that number shot up to 70 million. Turns out, another part of Target's system had been breached.

Now, who knows if that'll happen in the Equifax case. The credit bureau did not immediately respond to request for comment regarding whether it was still investigating or if it had reason to believe its original estimate of 143 million customers (nearly half of the U.S. population) would rise.

But when a company that essentially deals in data is breached, it's better to be safe than sorry. There are laws that'll protect you from shouldering the cost of fraud, but, unless you have identity theft insurance, the clean up can still cost you. Way more than a $2 to $12 credit freeze fee.

How to credit freeze

You have to contact the bureaus directly. And individually. Just freezing your Equifax report won't stop a lender from pulling a credit report from Experian and TransUnion. And, since a lender or service provider could be getting your data from any one of 'em, well, a solo freeze won't provide all that much cover. In other words: even though, yes, it'll be a bigger pain in the ass, it's good idea to freeze all three. You can contact each bureau via the number or hyperlink below. (Leading with Equifax, for obvious reasons.)

Equifax.com 1-800-349-9960

Experian.com 1-888-397-3742

TransUnion.com 1-888-909-8872

To freeze your reports, you'll need to give the bureau your name, address, date of birth, SSN and possibly some other personal info. Here are some other tips for navigating a credit freeze:

  • Keep your PINs in a safe place. Shortly after the freeze is requested, you'll get a PIN number (sometimes via snail mail for security purposes). Do not lose it. These are the digits you'll need to thaw your reports and, subsequently, apply for loans or services. It becomes astronomically harder to do without them.

  • Know the laws about when the freeze will be listed. Most states allow a freeze to stay in place until you have it permanently lifted, but, in a few freezes automatically expire after seven years.

  • Remember, a credit freeze won't spare you from every type of fraud imaginable. Just new account fraud. You'll still need to keep an eye on financial accounts, for one, since blocking your credit report won't block a thief from using stolen credit card or debit card numbers.

  • A credit freeze won't keep you from monitoring your own credit. You can still request your credit reports (and should) for free each year at AnnualCreditReport.com.

  • If you really don't want to freeze your credit, at least consider putting a fraud alert on your main credit reports. A fraud alert lets creditors access your credit report as long as they take steps to check your identity, so it provides a little bit of protection.

You can find more tips for surviving Equifax's data breach from hell here.

Did you have your identity stolen in the Equifax data breach? Learn more about buying identity theft insurance.

Image: Nicolas McComber

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