Worried about Identity Theft? Protect Yourself with a Credit Freeze

In previous posts, we have discussed ways to protect against fraud while managing your finances online as well as the problems that can result from a negative credit score.  But, even following best practices for cybersecurity cannot always protect you from identity theft and the loss of money and/or damaged credit history that can result.  Your bank or credit cards may be stolen, a company or government entity with your financial information may be compromised (e.g. the IRS and Target in recent years), etc.  Given this risk, the three major credit bureaus are now offering the option of using a “credit freeze” to seal your credit reports, which effectively prohibits identity thieves from establishing new credit accounts in your name.

How Does It Work?  To freeze your credit reports, you submit a request online or by certified mail with all three major credit bureaus–Equifax, Experian, and Transunion.  You then receive a PIN that allows you to temporarily lift the restrictions (“thaw your credit”) when you are applying for a new credit card, loan, job, apartment, etc., and know that a particular entity will need to access your credit reports.  You can lift the freeze either for a specific amount of time or for a specific party, e.g. potential employer or landlord.  When the freeze is in place, creditors cannot see your credit report, so they will generally reject any applications to open accounts in your name.  However, the freeze does not affect your credit score, your use of existing credit cards, or your ability to receive your free annual credit report for ongoing credit monitoring.

How Much Does It Cost?  The cost to freeze and thaw your credit reports varies by state.  In Virginia, the cost for all three credit bureaus is $10 for a freeze, and any temporary or permanent thaws thereafter are free.  The same cost applies if you are freezing credit for your child (under age 16).  If, however, you submit evidence of having been a victim of identity theft, freezing your credit is free.

Are There Potential Drawbacks?  If you are in a line of work that requires financial institutions or other creditors to access your credit reports frequently, the effort (and possible cost, depending on your state) of thawing your accounts may be overly burdensome.  Additionally, while a freeze will likely inhibit identity thieves from establishing new accounts in your name, it will not prevent them from making changes to existing accounts, so you still need to monitor bank and credit card statements vigilantly.

If you suspect that you have been a victim of identity theft, contact the Federal Trade Commission and/or your local police department to report it and to receive guidance on next steps.  You will want to notify the credit bureaus, your bank and credit card companies, and the post office to put them on alert.  Finally, please give us a call so that we can monitor your accounts and help in any other way we can!