A Tool to Preventing Identity Theft
We live in a digital age and your credit history is your financial reliability calling card. Without a sufficient credit score, you may have trouble qualifying for auto loans, mortgages, credit cards, and may have higher premiums for home and auto insurance, among other challenges.
Credit is measured on a scale of 300-850. Generally, any score above about 690 is considered good, but scores in the high 700s and low 800s are the goal. Your credit score is calculated using many factors such as your debt-to-income ratio; the number, type, and duration of loans; using the length of your credit history; and adverse financial history such as missed payments, bankruptcy, or foreclosure.
But what if your personally identifiable information is stolen, enabling someone to open lines of credit under your social security number? It doesn’t matter how reliable a consumer you’ve been for thirty years, a single identity theft incident can erase decades of diligent work gone.
What is a Credit Freeze?
Fortunately, a security freeze–or credit freeze as it’s often called–is a tool to prevent the more damaging financial affects of identity theft. A credit freeze prevents any new creditors from viewing your credit summary. Legitimate creditors will generally not grant new lines of credit if they are unable to consult your credit history, effectively preventing anyone (including yourself) from opening new lines of credit against your name until your credit summary is unfrozen. So, it doesn’t technically freeze your credit score per se, but pulls it behind frozen sheet with restricted access.
Since September 2018, with the Fair Credit Reporting Act (FCRA), you can freeze and unfreeze your credit for FREE at any time with the three credit reporting companies: Equifax, TransUnion, and Experian.
A credit freeze does not prevent those three credit reporting companies from continuing to track your credit history, it does not prevent government agencies from lawfully reviewing your credit, and it does not prevent you from reviewing your own credit summary with each reporting company.
What If I Need A New Line of Credit?
If you do need to apply for a new line of credit, or want to allow a creditor to see your credit report for any other reason, you can simply unfreeze your credit or request a temporary unfreeze with each company.
More information on freezing credit scores and other consumer education information can be found on the Consumer Financial Protection Bureau (CFPB) website. The CFPB is a U.S. government organization tasked with ensuring financial institutions such as banks and lenders, treat their customers (including you!) in accordance with federal financial consumer laws.
How to Freeze Your Credit Score
You can freeze your credit score over the phone, by mail, or online. If you have all your personally identifiable information on hand including social security number, birth date, address, and phone number, you can easily freeze your credit online within a few minutes. Don’t forget to freeze at ALL THREE companies: Equifax, TransUnion, and Experian.
At each credit reporting company, find their “security freeze,” or “credit freeze,” page and click the button to start your freeze. You will be prompted to create an account if you have not already. Remember to create a robust password with a combination of letters, numbers, and symbols.
While you’re in each of your accounts, you also have the opportunity to pull a credit a report for free. Also, Equifax allows a free monthly credit score pull. Again, freezing your credit summary does not prevent you from viewing your own credit summary.
#1 – Equifax
#2 – TransUnion
#3 – Experian
Experian does require you to establish a 4-digit pin when you freeze your credit score. Do not forget this! If you have to write it down, keep it in a very safe place.
A Security Note
Your credit is one of the most vital digital pieces of information about you. Use robust passwords and trusted, password protected wifi such (i.e. not public wifi). Double check your website URLs to ensure you are on the legitimate company and federal websites. All federal websites will end in “.gov” and have a small banner at the top of the page that says “An official website of the United States government.”
Finally DO NOT give out your personal information over the phone unless YOU called the company. These companies will also never request your personal information via email either.
Where to Get Help
If you believe you are the victim of identity theft, the CFPB recommends you immediately place fraud alerts and/or credit freezes on your credit summaries at all three credit reporting companies. They also recommend filing a report at IdentityTheft.gov, operated by the Federal Trade Commission (FTC), where the FTC can help you build a recovery plan.
If you or someone you care about is the victim of a fraud, scam or financial exploitation, you can also report the fraud or scam to the FTC.
If you have a dispute with a financial institution in which you are unable to resolve the dispute directly with the institution, you can file a complaint with the CFPB.
If you are an employee of a financial institution which you believe has violated federal consumer financial laws, you can alert the CFPB to the potential violation.
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