How, Why and When to Get a Security Freeze

Credit RatingPlacing a security freeze on your credit file has always been a smart move. But these days, it makes more sense than ever.

That’s because identity thieves have switched tactics — focusing on opening new fraudulent credit accounts rather than exploiting existing ones. In its 2016 Identity Fraud Study, Javelin Strategy & Research reports that with the switch to chip-enabled cards, fraud involving new accounts more than doubled in 2015 from the previous year. Meanwhile, some 180 million personal records were lost or stolen last year — data that thieves could use to open new financial accounts in your name — and that trend is expected to continue.

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Although security freezes were initially advised (and created) for victims of identity fraud, consumer protection experts now recommend that most, if not all, Americans should get them … even before their information is stolen.

Why get a security freeze? Once enacted, it prevents potential creditors from pulling your credit file for review, which is done by credible lenders and businesses before new financial or service accounts are issued in your name. So with a freeze, if ID thieves apply for credit in your name, they won’t get it. (Current creditors, as well as debt collectors working on their behalf, can still access a “frozen” credit file — as can government agencies involved with a court order, subpoena or search warrant issued against you.) Because each credit inquiry has the potential to lower your credit score, a freeze also helps prevent inquiry-resulting dings.

What’s involved: To place a freeze, you need to contact each of the three major credit bureaus: Equifax (800-349-9960), Experian (888-397-3742) and TransUnion (888-909-8872). A fourth and lesser-known bureau, Innovis (800-540-2505), also allows for security freezes.

Fees may apply — generally $10 or less per freeze (at each credit reporting bureau) — but typically are waived for documented victims of identity theft and those 65 and older, victimized or not. When applying online, you’ll be asked for your name, current and past addresses, Social Security number and birth date. And to confirm your identity, there may be questions about your employment history, phone numbers or past loans. Once the application process is completed, each bureau will provide a unique personal identification number (PIN) that you can use to lift or “thaw” the security freeze. Keep those PINs in a safe place.

The drawbacks: A freeze remains in place until you ask the credit reporting company to temporarily or permanently lift it — and depending on your age and where you live, each request can cost up to $10. That can add up when you need others to have access to your credit file, such as when you’re applying for a job, credit account or loan, or switching utility or insurance providers. (If any of those currently or may soon apply to you, it may be wise — at least, less expensive — to hold off on enacting freezes.) If you have active freezes or want them now but need a lift, you can always ask which reporting bureau will be used by possible employers, creditors or service providers, and place a lift on (and then re-enable) the freeze only at that bureau.

Besides the thaw and refreeze costs, security freezes don’t provide universal protection. For instance, freezes (along with fraud alerts) do nothing to stop fraud on existing credit or debit cards. And even with a freeze, crooks can still use your Social Security number to get a driver’s license or file fraudulent tax returns in your name. Still, the benefits of freezes far outweigh their limitations — and they are much stronger, and a better choice for most consumers, than fraud alerts.

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A fraud alert on your file, although always free, means that lenders or service providers can access your file, but shouldn’t grant credit in your name without first contacting you to obtain your approval. However, they are not legally required to do so.

Fraud alerts are easier to place: Simply notify one bureau and it will share your request with others. They last for only 90 days, but you can renew them. In contrast, a freeze remains until you lift or remove it with your designated PIN.

For information about other scams, sign up for the Fraud Watch Network. You’ll receive free email alerts with tips and resources to help you spot and avoid identity theft and fraud, and gain access to a network of experts, law enforcement and people in your community who will keep you up to date on the latest scams in your area.

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