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The Answers to All Your Credit Freeze Questions

   Posted On: September 15, 2017  |    Posted In: Personal Finance 101  |     Posted by: Broke Millennial®

The Equifax data breach is the first time I’ve felt a sense of dread over hackers stealing personal information from a company. This isn’t just about  credit card numbers, names, and maybe addresses being sold on the dark web. I’ve had my credit card (and even debit card) compromised before and it’s not a huge headache to handle. This Equifax breach though, that’s all the important personal information down to Social Security numbers, birth dates, addresses, and possibly driver’s license numbers. It’s wrapping up everything an identity thief to make your life miserable.

Like 143 million other Americans, I had the pleasure of receiving this delightful message from Equifax:

You can check for yourself if you’ve been impacted by going here.

TrustedID Premier is Equifax’s credit monitoring and identity theft protection service. I’ll be honest, I’m not terribly inclined to put my faith in the company that compromised my information to protect said private information moving forward.

Instead of immediately enrolling in TrustedID Premier, I decided to get a little more hands on and put a credit freeze on my credit reports across all three bureaus (Equifax, Experian, and TransUnion). When I first published this post around 4 pm on September 15, 2017 – I had been unable to get through to put the credit freeze on my Equifax report. The credit bureau claimed it’s due to the high demand which is creating technical issues. I have been able to put freezes on Experian and TransUnion. Later that night around 11:40 pm, I was able to get through and freeze Equifax as well.

At this point, you’ve probably read the advice to put a credit freeze on your reports elsewhere in the news – so I’ve had a lot of questions from readers, friends, and family about what exactly that means and what a credit freeze does. So let’s dive into everything credit freeze!

WHAT IS A CREDIT FREEZE?

When you apply for credit – whether that’s a credit card, auto loan, mortgage, or any other kind – the lender pulls your credit report in the process to determine if you are a reliable borrower. Think of a credit freeze as the ultimate way to shut down a lender being able to pull your credit report. When a lender tries to pull a frozen credit report, the lender receives a message indicating the report is frozen. You as the rightful owner of said credit report will have a pin number that will give you the ability to temporarily thaw or permanently unfreeze your report in order to give a lender access.

If the person requesting the loan or line of credit is unable to thaw the report, then the lender will also know it’s likely a fraudster.

WHY YOU’D WANT TO USE A CREDIT FREEZE

A credit freeze is one of the most proactive measures you can put in place to deal with the threat of identity theft. All the necessary information for an identity takeover could be floating around or already sold right now due to the data breach. That means people could be applying for mortgages, buying cars, getting cell phone plans, and opening credit cards in your name. When that debt goes to collections – the debtors are coming a knocking on your door.

Freezing your credit report with all three credit bureaus now is going to make it much harder for thieves to use your information in nefarious ways.

JUST EQUIFAX WAS COMPROMISED, WHY PUT A FREEZE ON ALL 3 CREDIT REPORTS?

Yes, just Equifax experienced the data breach – but the compromised information is all a thief needs to start assuming your identity. Let’s say a scammer named Sammi has my data. Sammi can head over to Chase and get a personal loan as Erin Lowry. Now it’s important to know that lenders are not always pulling all three credit reports. Instead, maybe Chase only uses TransUnion reports. If I only freeze the Equifax report, but it’s not the one the lender pulls, then Sammi has no problem getting a loan as Erin.

YOUR EXISTING LINES OF CREDIT STILL FUNCTION 

For the most part, your existing lines of credit will remain largely unaffected by your decision to freeze your credit reports. You can still use your credit cards, your mortgage will be fine, student loan debts are still a burden, and your auto loan will be intact. However, if you want to change any current lines of credit, such as refinancing student loan debt or asking for a credit limit increase, then you may need to thaw your reports to grant access to your lenders.

YOU CAN STILL PULL YOUR CREDIT REPORTS

You’ll also be able to still access your own credit reports after issuing a freeze. By federal law, you are entitled to one free copy of your credit report from each of the three bureaus per year. Go to annualcreditreport.com to pull your reports. It’s also a great idea to do this soon to check for any irregularities and, assuming it’s all correct, get a sense of what your report should look like.

IT DOES NOT NEGATIVELY IMPACT YOUR CREDIT SCORE

One of the biggest questions I keep receiving is some iteration of “I’m trying to improve my credit. How will freezing my report impact my credit score?”

The freeze itself will not negatively impact your score because your current lines of credit will just keep reporting per usual.

YOU CAN STILL BE IMPROVING/MAINTAINING YOUR CREDIT SCORE

The first step to continuing to improve your credit score is to keep making on time payments every month. The second is to keep the utilization rates (amount of available credit you’re using) on your credit cards nice and low. The ideal is less than 30% per month.

As long as you keep making those moves (or paying down credit card debt to get towards the ideal utilization), then you’ll keep seeing improvements in your score.

For those with healthy scores already, just keep maintaining those good behaviors after the freeze and all will be well – assuming there isn’t ID Theft that sends debt to collections.

HOW YOU SET UP A CREDIT FREEZE

The process is quite painless. You’ll be asked basic information including full name, Social Security number, birth date, current address, and last address if you’ve moved in the last two years. Then you’ll be taken through a series of questions to confirm your identity, which usually revolve around where you’ve lived and your previous or current lines of credit. Don’t be too freaked if there is one or two to which you answer “none of the above” or “does not apply”.  You’ll receive confirmation of the freeze along with a pin number. Protect the pin number!

You can initiate the process with each credit bureau online by using the links below:

DON’T LOSE YOUR PIN

You’ll either be assigned or asked to create a pin number when you set up your credit freeze. It will be a unique pin with each credit bureau. Do not lose this pin! It’s what you will need to unfreeze or thaw your credit report. It will become incredibly difficult to unfreeze if you lose your pin number. Also, don’t store your pin in your email.

DOESN’T A CREDIT FREEZE COST MONEY?

Yes, a credit freeze can cost money depending on your state. It’s generally free if you’ve been the victim of identity theft, but in some cases you do need to file a police report to formerly claim you’ve been a victim. The cost is generally no more than $15 per credit bureau if you don’t file as a victim of identity theft and often times states allow you to freeze for free the first time.

You can learn more about the fees in your state by clicking here. 

I’M IN THE MIDDLE OF APPLYING FOR CREDIT, WHAT DO I DO?

You might be in the middle of applying for credit or about to shop around for a mortgage, auto loan or student loan refinancing. If any of those things are happening in the next month, then it’s best to just keep an eye out for unusual activity but hold off on freezing until after you secure your loan. But if it’s more like three to six months away, then it may be in your best interest to freeze now and do a temporary thaw later when you’re ready to shop around.

FRAUD ALERTS INSTEAD OF A FREEZE

Not convinced that a credit freeze is the way to go? Then you could place fraud alerts on your credit reports. It won’t freeze your reports, but alerts potential lenders that you may have been the victim of fraud and that the lender should take extra precautions before granting a line of credit. Generally, a fraud alert will last 90 days, but you can ask to extend for up to seven years. You will need an identity theft report in order to place an extended alert on your reports.

It’s not a bad option, but doesn’t give quite as much protection as the freeze because a fraudster may have the necessary information needed to answer the questions a lender could ask to verify your identity.

WHEN A CREDIT FREEZE WON’T BE TERRIBLY HELPFUL

Unfortunately, a credit freeze isn’t a cure-all for the Equifax data breach or any identity theft. It certainly helps mitigate some of your risk, but you still need to be vigilant for issues like medical identity theft as well as tax fraud. With your name, address, birth date, and Social Security number – fraudsters could claim to be you in order to receive medical care and that bill is either coming to you or going to collections and landing on your report. You may also have an issue with someone filing as you for a fake tax return. You’d find out about that when you file your own annual return and it reports that you’ve already filed. Neither of these require credit reports to be pulled, so a credit freeze isn’t much help.

You can try to beat any fraudster to the tax return issue by filing early instead of waiting until the April 15th deadline. Medical debt is a bit harder to defend against other than monitoring your credit report and flagging misinformation. Unfortunately, it will still be quite a headache for you if a medical debt goes to collections as it will tank your credit score while you fight to prove it’s not your debt.

IDENTITY THIEVES RUN A LONG CON…

You have to keep your guard up for a long time now. Identity theft isn’t just a short-term problem. That information isn’t going to be changing, so it could be months or years before you may have your identity compromised.

Be vigilant for phishing scams via email, snail mail, or the phone. Don’t give anyone information about your insurance plans, more identifying information, or bank details. Keep an eye on all your existing accounts as well. Set up any alerts available to you for bank accounts and credit cards so you can be notified of a scam charge or transfer immediately. This hack could mean they’re coming for your existing accounts, not just making new ones in your name.

You can also start to brush up on how to handle identity theft by reading the Federal Trade Commission’s Identity Theft action plan.

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6 responses to “The Answers to All Your Credit Freeze Questions

  1. Thanks for sharing all this! Its so helpful. I was starting to panick because I wasn’t sure what I should be doing, so I appreciate that you provided the link to see if we were affected or not. Thankfully, I’m safe for now. At least now I know I have the option to do a credit freeze, I didn’t even know there was such a thing.

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