With the Equifax revelation, I'm seeing a lot of questions regarding credit freezes. I wanted to clarify what they are, how it works, and also what kind of impact it will have on you and your credit.
What is a credit freeze?
A credit freeze is a request to one of the credit reporting bureaus to lock down your credit file. It prevents anyone (including yourself) from pulling your credit to open a new line of credit. This is helpful because now no one can open a credit card, cell plan, loan, mortgage, etc in your name. You are not ultimately responsible for fraudulent activity performed in your name, but there is a lot of hassle involved and a freeze prevents that hassle.
How do I freeze my credit?
Freezing is a very simply process. I did it after a breach last year and it took a few minutes per bureau. You can follow the steps below for each of the three major bureaus: equifax, transunion, and experian.
- Go to their respective websites and locate a link to 'freeze credit' or similar.
- You will have to verify your identity via a series of questions
- You may have to specify a temporary or permanent freeze
- You will pay them to lock down your credit file (to me this is like ransom money - ridiculous)
- They will freeze your credit and provide you with a personalized PIN number that you need to keep safe
- Go forth and enjoy relative security
Does it cost anything?
Generally yes. The price depends on your state and ranges from $0 to $10 per bureau, so expect to pay up to $30 all said and done.
Will a freeze affect my _______?
A credit freeze will not affect the following things (not an exhaustive list):
- Current lines of credit, such as mortgages, credit cards, and student loans. You can still access them and pay them off - they will behave as normal.
- Credit limits or increases. It will not change your credit, and anecdotally speaking my credit limit across all lines has still increased following my credit freeze.
- Credit reporting: all your future payments to existing credit lines will be reported as normal, on time or late. Negative events like bankruptcy, repos, eviction and foreclosure will still be reportable.
- Your credit score: your score will not be affected by a freeze. Keep in mind that it can still change based on your payment history, so your score will still be affected by the above reporting.
- Your report: you can still access your full credit report for free once a year from each of the bureaus.
How do I use my credit after it's been frozen?
Unfreezing or 'thawing' your credit is what you can do when you DO need your credit pulled: mortgages, new CCs, apartments, even insurance will want to pull your credit for legit reasons. Thawing can be done permanently or temporarily, also through the bureau websites.
- Each bureau website will have a link to thaw your credit
- You prove your identity using the PIN you received when you froze your credit
- You choose either a permanent thaw or a temporary one (if memory serves you can thaw for anywhere between 1 and 30 days)
- You pay them for the service (again, ridiculous). The price will be the same as it was to freeze it.
- It's done - I had a hard pull done minutes after I finished this process.
Does a freeze protect me from every kind of ID theft?
Unfortunately no, but certainly the majority. A freeze only protects you from fraud related to your credit report - people open all kinds of accounts using your name and credit. But someone with your personal info can also file a fraudulent tax return in your name, which is why in light of this breach you should try to file your 2017 return ASAP in 2018. Again, a fraudulent return will not prevent you from getting your rightful refund, but you'll have to wade through a lot of paperwork and waiting. You may end up getting your 2017 refund closer to 2019. A freeze will also not prevent someone from stealing account info and using one of your existing cards or bank accounts. This is why it's STILL a good idea to have a Credit Karma account to monitor your credit use and make regular checks on your bank accounts as well.
Takeaways
- A credit freeze is a cheap way to insulate yourself from credit-based ID theft. Given how much information is out there, I think it's a smart idea for everyone.
- When you do get your credit frozen, KEEP YOUR PIN SAFE AND EASY TO LOCATE. Huge hassle to prove that you're you if it gets lost.
- After a freeze your current credit accounts and score will not be affected - business as usual for everything you already have open.
- It's easy to thaw your accounts if you need to legitimately use your credit.
Feel free to add anything - I hope this is helpful to a lot of people who may be scared or confused about what to do in light of Equifax's recent breach.
Submitted September 08, 2017 at 11:31AM by chocolate_soymilk http://ift.tt/2wO3vBk
