A credit freeze is an effective way to block unauthorized access to your credit file. It is a security wall preventing anyone from applying for a credit card, car loan, instant credit, or any other loan in your name.
Identity Theft
Every day, we are all potential victims of financial fraud, including personal identity theft. Even though many credit cards now offer identity theft insurance, resolving identity theft is a time-consuming process that can take months or even years.
Data Security Incidents
Many agencies hold thousands or millions of personal records, including our data, and they are often compromised. Companies are obligated to inform us about such security breaches, triggering a “data security incident” letter. They will frequently offer free credit monitoring for one to two years for your peace of mind. The second largest data breach ever was just revealed recently and involved a national public data agency. Also recently hacked was a major free credit agency that keeps troves of our financial data.
Protect Your Social Security Number
There are many places where our personal data and identity can be compromised, but most happen in medical facilities. Even if a medical form asks for your social security number, leave it blank – your insurance card information is sufficient to file your claim. For the same reason, never carry your social security card in your billfold.
Fraud Alert and Credit Freeze vs. Credit Lock
Setting up a fraud alert is “too little too late” because the fraud has already occurred by the time you find out about it. It does not do anything to prevent having your identity stolen. Credit freezes and locks are offered by individual credit agencies. A credit freeze is a free service, while a credit lock is a paid, yet they serve essentially the same function. They were first instituted in California in 2002 and became a federal law by 2007. They both restrict access to your credit report or the ability to run your report (soft or hard, which also lowers your credit score) and prevent anyone from opening a new line of credit in your name, including you. You must request a separate credit freeze from each of the three agencies. If you know someone will need to run your credit report for a legitimate reason, taking out a car loan, for example, or you will need to unfreeze that particular report for a brief period with the credit agency they are using. Freezing and unfreezing happen instantaneously.
How to Freeze Your Credit
To freeze your credit, you must contact all three nationwide credit reporting agencies – Equifax, Experian, and TransUnion – either by phone or by creating an account online. If you request a freeze online or by phone, the agency must place the freeze within one business day. If you request a freeze be lifted, the agency must lift it within one hour. There is no fee for this service if using a credit freeze. While your credit is frozen, you can still use your existing lines of credit and your credit cards.
Unfreeze Temporarily
If you are applying for a new credit card or know another party needs to check your credit, for example, to rent an apartment, you will need to unfreeze the credit briefly and then freeze it again immediately. By checking your credit report, you can see when this “soft check” was completed, and you can now freeze it right back. In some states, a credit freeze expires after seven years.
Yearly Free Credit Report
You are eligible for one free credit report per year. Pay attention to which service you use. Many websites claim to provide this service for free but will actually charge you a fee. Check for potential errors on your report and alert the credit agency of any inaccuracies. Also, be aware of credit repair services, as they are not legitimate because they can only remove items temporarily. There are legitimate steps to take to repair your credit and increase your score, all on your own.
You can read more about financial information in our previous blog post Unclaimed Money: How to Find and Claim Missing Money in Your Name and by watching our video Lunch & Learn: All You Need To Know About Credit Reports.
Sources:
Magda Born
mborn@kckpl.org
Community Services Librarian
913-295-8250 ext 1103
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