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Free credit freezes: A welcome chill

Summary

A credit freeze means you can stop anyone from opening new credit in your name and soon it won’t cost you a penny.

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Ted Rossman has seven years of experience in the credit card and personal finance industries as a member of the award-winning communications department at CreditCards.com and its sister sites The Points Guy and Bankrate.

Are you frustrated with all the data breaches that keep happening? Then I have some good news. Starting Sept. 21, credit freezes will be free in all 50 states. That means you can stop anyone from opening new credit in your name, and unlike the prior system, it won’t cost you a penny.

Think of a credit freeze as a state-of-the-art home security system that helps keep the bad guys out, versus credit monitoring, which is more like that text message you got from a neighbor after someone already smashed through your living room window and walked off with your big-screen TV. In the latter case, the damage has already been done, so the alert isn’t all that helpful.

See related:Credit monitoring: When is it worth paying for?

New federal law removes freeze fees

Credit freezes have been around for a while, but until this new federal law takes effect, they can be pricey. In most states, each of the three major credit bureaus (Equifax, Experian and TransUnion) has been charging up to $10 apiece for a credit freeze and another $10 to lift the freeze when you want to legitimately request new credit. That’s all about to change.

The new law was spurred in large part by the massive Equifax data breach that exposed the personal information of roughly 150 million consumers in mid-2017. After years of high-profile breaches involving popular retailers (Target, The Home Depot, etc.) and websites (remember when 3 billion Yahoo accounts were hacked?), the Equifax breach proved to be the straw that broke the camel’s back.

These have been sad episodes for consumers, but real, positive change is coming soon. Once the fees are eliminated for freezing your credit, this is a step everyone should take advantage of. Just know that you’ll need to use a PIN to thaw your credit before you apply for a new credit card, mortgage or other type of loan. A thaw can sometimes be done in minutes, but ideally, you’ll initiate the request about three days beforehand to avoid any potential problems. It’s a minor logistical hurdle but well worth it.

To sign up, you’ll have to register with each of the big three credit bureaus on their websites: Experian, Transunion and Equifax.

See related:How to freeze your credit: A step-by-step guide

What if you’ve already been a fraud victim?

If you noticed an unauthorized charge on your credit card statement, contact the card issuer online or by telephone. You shouldn’t be liable for any fraudulent charges (assuming you notified them promptly), and this is a pretty easy fix. You’ll likely get a new card (with a new number) within a few days and the inconvenience should be minimal.

If you’re dealing with more of a full-blown identity theft situation (someone opened new accounts in your name, for example), it’s going to take more time and effort to resolve. Start by reporting the incident to the Federal Trade Commission at IdentityTheft.gov. Next, file a police report.

The FTC and the police should help guide your subsequent course of action. It will probably involve placing a fraud alert with one of the three major credit bureaus (whichever one you choose is required to inform the other two). You’ll likely also end up dealing directly with a financial institution. For example, if a fraudster opened a credit card in your name, you’ll probably need to communicate with that card issuer to sort things out.

Identity theft can leave a big mess behind. The FTC estimates it takes victims about 30 hours’ worth of phone calls, emails and other persistence to unwind all the damage. Taking the proactive approach of freezing your credit, which is about to become easier and cheaper than ever, is a strong step toward avoiding this unpleasant chore. After all, there have been so many data leaks that it’s a question of when – not if – your information falls into the wrong hands.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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