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Published On: Mon, Aug 27th, 2018

Will Credit Freeze Become Really Free?

In spite of the advanced products and services that aim to protect people’s identities online, identity theft has been affecting more and more consumers over the recent years.

In the light of data breaches that have occurred during the past decade, many people have set their minds on finding the best way to protect their identities and prevent hackers from stealing their money and destroying their credit score.

If you are among these people, you will be happy to know that there are some effective ways to protect your identity. But there is one rather effective identity theft protection method which, surprisingly, is not used by many people – credit freeze. The reason for this may be the fact that people think placing a credit freeze is radical and it costs money.

Well, the first thing is not far from the truth, but have you heard that credit freeze is going to become free?

photo/Gerd Altmann

When Will Credit Freeze Become Free?

As a result of the Equifax data breach which occurred last year and compromised sensitive information of almost 150 million people, on May 22, 2018, the U.S. House of Representatives passed a comprehensive bill including a provision which introduces free credit freeze services. The bill will come into effect on September 24 this year, four months after President Trump signed it.

By passing this bill, the Congress demonstrated that the government will take better care of identity of the people across the United States. At the moment, the price of a credit freeze ranges from $2 to $10, depending on the state, while some states have already stopped charging for a credit freeze.

According to Zack Friedman, a contributor writer at Forbes, this is the Government response To Equifax Data Breach. The free credit freeze provision comes in response to last fall’s massive data breach at credit bureau Equifax that impacted almost 150 million people, Friedman said.

So, all of you who want to find a free and super-effective way to protect yourself from identity theft, be patient for another month. In the meantime, do some more research on credit freeze. This way, you will know everything about it and when is the right time to use it.

photo/ Jan Alexander

What Is Credit Freeze?

When you place a credit freeze, you make your credit reports inaccessible to most people. Your reports can only be seen by you and preexisting creditors and debt collectors.

In a word, a credit freeze is a complete lock-down of your credit report which prevents all credit bureaus from sharing or selling your credit data to creditors. You have to authorize any new lender if you want them to be able to see your credit report.

A credit freeze is the most radical way to protect your credit and sensitive information, which is why it is also the most effective method to prevent identity theft. No hacker will ever be able to access or abuse your credit report if they are not authorized by you.

Only you can approve new accounts under your name, which makes credit freeze the ultimate identity theft protection method. Now that credit freeze will become free, we highly recommend you to do this if you are worried about the safety of your credit report.

Equifax Data Breach

In 2017, a massive data breach occurred at Equifax, one of the three largest credit bureaus in the United States. This cyber security incident was discovered on July 29, 2017, and it was estimated that the breach may have exposed sensitive information of more than 148 million people, which is almost half of the U.S. population.

Even though Equifax issued statements of regret and pledged to fix all the damage inflicted by the breach, the scandal reached drastic measures once it was discovered that the three top Equifax executives had sold their shares before the news on the breach was even officially released. It was estimated that the shares were sold for $1.8 billion.

However, Equifax did try to introduce measures to improve the situation which resulted from this cyber attack. First, they offered a year of free credit monitoring to all potential victims hoping that would be enough to calm down their customers. But before too long, they realized that wouldn’t suffice.

People were enraged and the credit bureau had to take more measures. In September 2017, almost two months after the breach, they offered a free credit freeze to everyone who asked for it. The credit freeze was free for everyone who signed up for it by November 21.

Finally, Equifax refunded all fees that people had paid for credit freeze and other breach-associated expenses since the breach disclosure.

This breach will remain in bad memory of all Americans, especially those that fell victim to identity theft. But it also resulted in something positive – the bill passed by the Congress in May this year includes a provision on free credit freeze. Starting September 2018, all three major credit reporting agencies will have to follow in Equifax’ footsteps and offer free credit freeze services.

How to Place a Credit Freeze

Freezing your credit file is easy, but it consists of a few steps. According to Elite Personal Finance, placing credit freeze is easy and can be done in few steps.

  • First, you need to check your state’s listing to find out the cost of a credit freeze. Check if there is price reduction available for senior citizens. Mind you, this is only in case you want to place a credit freeze now and not wait until late September when it will become free.
  • A credit freeze can be placed online, by certified mail or by calling the credit bureau.
  • In case you want to request this service by certified mail, you need to send a sample letter and include necessary attachments.
  • Finally, if you need to unfreeze your credit temporarily, simply do it online or call the bureau.

The new legislation will apply to all the people living in the United States who want to freeze their credit, temporarily lift the freeze or permanently remove it. If you decide to do this, it is important that you place a credit freeze at all the major credit bureaus: Experian, Equifax and Trans Union. With a unique PIN that you get when you apply for this service, you will be able to place or remove the freeze.

According to the legislation, the credit bureaus have to freeze an account within one business day of a request made over the phone or online, or within three business days if they are notified by email.

What You Should Know Before Placing a Credit Freeze

These are some of the steps you need to take before freezing your credit:

  • Educate yourself.

In other words, learn everything about credit freeze. When you place a credit freeze, you are preventing almost everyone from accessing your credit report. Before doing this, you should find out as much as you can about credit freeze and see if this is the right thing to do.

  • A credit freeze is not almighty.

Even though a credit freeze is quite powerful, there are some cases when it can’t protect you. For example, if a fraudster gets hold of your credit card number after a data breach, placing a credit freeze is pointless.

  • Prepare for credit delays.

Having a freeze on your credit can create delays when you need some quick cash and want to apply for a loan or credit card. If you think you will need to take out a loan soon, a fraud alert may be a better option.

  • Be alert.

Even with a credit freeze, you should check your financial statements regularly, set up alerts and strong passwords, as well as ask for help if anything goes wrong. Remember, a credit freeze is the most effective way to protect yourself, but it doesn’t protect you from everything.

Other Ways to Prevent Identity Theft

There are a few alternatives to freezing your credit, though all of them are less effective. Here are more tips on how to prevent identity theft.

  • A fraud alert lets lenders know that your account carries potential risks by marking your credit report. This way, lenders will stay away from it and your information will be protected.
  • Credit monitoring services are free of charge at a number of companies. What they do is give you an insight into your report and notify you every time a suspicious activity is recognized on your account.
  • Be careful how and to whom you give your sensitive information like your Social Security number, credit card number, home address, and so on. If you rely on yourself to protect your own private information, you will be much safer.

Conclusion

Placing a credit freeze is the most radical form of identity theft protection. For this reason, it is the most effective method to protect your credit file, but also something that shouldn’t be played with.

Fraud alerts and particularly credit monitoring services are less radical, so try using them if you are not sure that your data has been compromised. Use credit freeze only when you are certain that your credit file has been breached.

Author: Janet Cook

Bio: I would say I am a simple whacky kid 🙂 whose mind is always open to learn more and more in this expanding universe.

Another quality that I possess is- Even when the house is on fire, I try to keep a cool head. I have the right mix of education, creativity, organisational skills and motivation to become a competent professional.

I prefer being involved in work rather than just watch it happening.

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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