New law permits consumers to freeze their own credit files quickly and without cost
Published Date 9/21/2018
Effective today, Americans can freeze-frame their credit reports, thawing them whenever they want to without cost, thanks to a new federal law. You can now do this via mail, phone, or online.
Because of the massive Equifax data breach of 2017 that exposed the private data of nearly half of all Americans, Congress passed legislation earlier this year that gives every consumer the right to lock up their credit information quickly and for free, making it unavailable to new creditors and identity thieves.
When you wanted to freeze/thaw your credit in the past, credit bureaus charged between $3 and $10 each time, making the process cumbersome and costly. The new law makes the process free, and nearly instantaneously on demand. Some points to keep in mind:
This new law sets up a pathway for blocking access to your credit report, with the process being as simple as signing on to each credit reporting company's website. You fill out a short form to establish who you are and choose a pin number that allows you to access your credit report. The freeze is supposed to go into effect within 24 hours.
Your ability to freeze your data makes it impossible for new creditors to see your payment history, stopping lenders from extending new credit based on that frozen file. This is especially helpful if an identity thief has gained access to your Social Security number, hoping to use it to apply for credit in your name.
But be warned: a credit freeze doesn't stop all types of identity theft. If someone simply steals your credit card or credit card number (the most common type of ID theft) and uses it to charge items on your account, a credit freeze will have no effect. In addition, it doesn't stop a crook from using your Social Security number for the purposes of tax fraud.
Ideally, you should freeze your report with each of the three major bureaus, as well as the National Consumer Telecommunications and Utilities Exchange, which provides credit information to cell phone and utility companies, according to experts at the U.S. Public Interest Research Group.
When you’re ready to use your credit again, simply go back to the same sites where you froze your file, plug in your pin number, and your credit will be unfrozen within an hour. Make sure you document your pin, however. If you lose or forget it, unfreezing your credit could be more time-consuming due to verification the credit bureaus must pursue to make sure you are who you say you are.
According to an article in MoneyWatch there are several exceptions to who can see your file when it's frozen. Insurance companies, employers and your existing creditors can still gain access to it.
The new law also permits parents and guardians to freeze the credit files of their age 16-and-under children. Older kids would be treated as adults, able to freeze their own files. And if you are the person legally in charge of an older person’s financial profile, you are also permitted to freeze that person's file on their behalf.
Another element of this process can extend the length of a fraud alert from 90 days to one year, with identity theft victims able to now extend alerts for up to seven years. But it’s also important to understand how credit reporting agencies do all this. The freeze will lock up the data for an agency’s subscribers. Companies with which you already have a relationship can continue to get updated information, but new companies cannot.
Before you lock up your credit file, be advised that your credit report is key to opening a bank account, with many institutions running a "soft" credit report to verify your name, address, and other particulars as part of identity verification. Mobile phone companies check credit reports before offering certain types of plans. And if you plan to rent an apartment, there is a good chance the landlord will do a credit check, assuring themselves you are a good risk to occupy their property. Once you move in, utility companies might also routinely check you out.
It’s just as important to determine why you would want your credit file to stay fluid as it would be to freeze it, planning ahead for when a freeze is most prudent. Even though the new law specifies credit agencies must lift a freeze within an hour of a request, don’t bet on getting the mandated speed when you need credit instantaneously. It could backfire if there is a glitch in the system or their servers are down.
Even if this new law only blocks a certain percentage of ID theft attempts, however, freezing your own credit whenever you see feasible is well worth the trouble. Within an environment of nearly constant data breaches, it protects you without causing a lot of inconveniences.
Source: MoneyWatch, USToday, TBWS
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