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Credit Freezes – How Far Do You Want to Go to Lock Out Identity Thieves?

It seems like every week there is a headline of yet another data breach. Many people know somebody who has been a victim of identity theft. Could you be next? For sure there’s a sense of vulnerability. Some people are going the extra step to protect themselves, and are freezing their credit as a way to keep identity thieves at bay.

A credit freeze restricts access to an existing credit file, making it more difficult for anyone to open new accounts in your name. This is because most creditors need to see your credit report before they approve a new account. If they can’t see your file, chances are much higher they will not extend the credit, says Kevin Gallegos, a vice president with Freedom Financial Network.

Is this a good idea though?

One plus is that a credit freeze does not affect your credit score or prevent you from getting your free annual credit report. The freeze prevents a credit reporting agency from releasing your credit report without your consent.

"Freezing your credit is appropriate if you’ve been a victim of identity theft. It will greatly diminish the chance of a repeat offense," points out Craig Lemoine, a professor at The American College of Financial Services.

This strategy also makes sense if you won’t need to access any credit for a long time. "If for example, you have a mortgage in place and you’re positive you won’t need a car loan or new credit card, and don’t have an adult child who needs a co-signer," says Gallegos.

What you need to think about

But there is no free lunch. There are some key considerations when freezing your credit. "It costs you $5-$10 typically to set up a freeze and just as much to turn it off. You need to freeze your credit at all the credit bureaus – Equifax, Experian and TransUnion so those fees can really add up," says Howard Dvorkin, author of Credit Hell: How to Dig Out of Debt.

But for some, it’s money well spent. Mary Kaarto, who has been laid off twice, and is author of Help for the Laid Off, had her own issues with debt such that she participated in a debt reduction program for many years to get back on track. "With everything I went through, the last thing I was going to allow was someone to steal my good name and good credit," says Kaarto. The few times she needed to unlock her credit file to make a large purchase she says she didn’t mind paying the $10 to unlock her file and to pay $10 to lock it back up. "The fees are minimal. I have peace of mind."

Credit checks are often used by banks in the application process of deposit accounts. Some banks will even do a credit check when existing customers try to open a new deposit account.

Be aware too, that any time you need to borrow, extend a credit line or refinance, the process will be more "arduous and lenders will see your report has been frozen," says Lemoine. Unfreezing may require answering a series of personal questions that relies on an accurate report and memory, he adds.

Credit checks are often used by banks in the application process of deposit accounts. Some banks will even do a credit check when existing customers try to open a new deposit account.

Because credit is essential to so many areas of life these days, a credit freeze can be a hurdle of sorts in ways that you might not readily think of, such as when you are applying for a job, apartment, government services, buying insurance, or even getting a new cell phone contract, your credit will need to be accessible.

Just because you have a credit freeze that doesn’t mean you can totally let your guard down. "You still need to monitor all bank, credit card and insurance statements for fraudulent transactions," says Gallegos.

Take other steps to protect yourself

Truth is, there are many ways to keep identity thieves out of your business. Gallegos advocates using chip-enabled credit and debit cards, especially those that have an extra level of security with a PIN number.

Review your credit report. Once a year you are entitled to a free copy from the three major credit bureaus. You can get it at annualcreditreport.com. Look for name misspellings, incorrect addresses or credit accounts that you do not recognize. Address any problems immediately.

Create online passwords that mix letters, numbers and symbols. Do not use something that is easy to figure out, such as birth dates or a maiden name. Says Gallegos, "Have an unique password for each online account and change it monthly. If this is too much to remember, and for many people it is, sign up for a secure password management service via LastPass or PasswordGenie. You can also password-protect credit cards and bank accounts. This prevents thieves from fraudulently withdrawing money or running up credit charges."

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RobofNY   |     |   Comment #1
While there are definite problems with a credit freeze, I feel the extra security is worth it. I've
had to jump through some hoops when opening a new bank account. But I tend to open a new one every couple of years. 
However, if my SS # is ever stolen, this should reduce the amount of damage they can do (at least somewhat).
Anonymous   |     |   Comment #2
It's good, but it dont cover all id theft.  There is also tax fraud, enployment fraud, health benifit fraud, driver license fraud, etc.
Anonymous   |     |   Comment #3
To avoid complications of being locked, but reduce junk mail credit card offers (and thus identity theft via them) opt out of credit disclosures via https://www.optoutprescreen.com/  . Note that a permanent block requires mailing in a form.
Anonymous   |     |   Comment #4
I have a standard letter (don't use web site for credit reports) that my spouse and I use for obtaining credit reports...every 2 months an individual request is made by one spouse to one credit reporting agency...free.  In that letter I state that name, etc. cannot be used for marketing, promotional material, etc.  No credit issued w/o my written authorization.  I have a security freeze with all three agencies.  On and on.  The amount of junk mail is minimal...some days no mail.  I use a PO Box for all financial matters.  I use an EIN for tax purposes, i.e. when I send invoices out I use it, not my Soc Sec no.  I have read in several places...the ultimate "option" is to get a new Soc Sec number...has anyone heard of someone doing that...and how "difficult?"
Volstagg   |     |   Comment #5
Wasn't mentioned in the article but at least in North Carolina there is $0 cost to freeze and thaw your credit reports if you do it online (State Law).  I've had mine frozen for over 7 years and its never cost me anything, doing a temporary lift for 1-2 days to get a new card or open a bank account takes about 5 minutes on their various web sites.  Other states have implemented similar laws so check your local government site.  Every state should do this!
Anonymous   |     |   Comment #6
A credit freeze has been useful when banks claim that they only do a soft pull to open an account and then you find out they were trying to do a hard pull when they tell you they couldn't access your info.  has happened tome several times, almost all of them credit unions.  saved myself several hard pulls as i refused to unfreeze for the,
Anonymous   |     |   Comment #7
If a thief has all the info from the credit report, you may be locked out of your own credit file and the impostor becomes you and you become the impostor.
It is very easy to do what I just said above, the thief needs just to change the contact ID before going on a rampage. You will need months or years to rectify it later and it may be next to impossible if the thief constantly changes some info in your credit file.
Anonymous   |     |   Comment #14
The Sec freeze pin in not on any credit report.  If the credit agency allows access (to those that have never granted credit), my lawyer likes those types of "Trump" lawsuits. 
cactus   |     |   Comment #8
Changing your passwords every month is unnecessary and can reduce your protection because you have to keep track of all the changes. However, a unique password for each account is an absolute must.
Anon   |     |   Comment #9
This made me think that I'd like to be notified each time a credit check is done on me; just who initiated it and what kind of inquiry.  Has anyone heard if such a service is available?
Anonymous   |     |   Comment #10
It is impossible to do such request from the credit companies, it will clog their system of irrelevant info flying around and by the way, many Banks and financial institutions have their own d-base of customers and they access the credit files under different corporate names and or affiliates.
If you have multiple credit cards and if you request a credit report, you will see inquiries on monthly bases from most of the credit card companies  and a thief can easily mix one or two extra inquiries and you will never know.
Anonymous   |     |   Comment #11
Credit report reflects same, and if not employer, new credit app, etc. you may have a legal action against the agency for improper release under fed law.  Can control release to only those that have granted credit to you in the past by a security freeze.
pearlbrown   |     |   Comment #12
Anon#9, the info in this thread may be of interest to you.
Anon   |     |   Comment #13
Indeed it is, pearlbrown.  Thanks so much.
artemus   |     |   Comment #17
I have been the victim or id theft. I am in the process of placing security freeze.  I didn't initially realize that I had to do each credit reporting agency individually.  When I need to unlock the freeze temporarily, do I have to unlock all 3 agencies.  Does anyone have experience with this?  Is it difficult to open cd accounts with a new bank if there is a security freeze?
Anonymous   |     |   Comment #18
ok, I read on the north carolina justice site that you dont need to unlock all 3 agencies. You can find out from the company you are dealing with what credit agency they use and just unlock that one.  i am not sure  what the banks do
Anonymous   |     |   Comment #19
Tell the bank that you have a security freeze on your credit report.  Tell them that that adds another level of protection to them!  Ask if they really WANT access but ask the bank which credit agency they use...they could also credit you the fee to "open" it since it is ONLY for them!  Beats a toaster.   Other on this list may have something say on soft v. hard pulls.
Anonymous   |     |   Comment #21
Security Freeze?  After reading about how Wells went around those Freezes and "stole" the IDs of its customers to open unauthorized accounts...where is the protection from ID thief?  If the Wells management had a decent compliance program, i.e. auditors, this would have been caught in the bud.  But if no criminal prosecution by state/feds...shame on "us!"  Close down criminal enterprises!
LuvCD   |     |   Comment #22
Just reviewed a recent credit report and see an inquiry from a bank and there was a freeze with the credit agency...how can this happen? Anyone experience other unauthorized credit inquiries where there is a freeze in place?
???   |     |   Comment #23
relationships with a bank gives them the privilege of a "sneak peek" ?
LuvCD   |     |   Comment #24
Any authority for that, other than that must have been Wells model
#25 - This comment has been removed for violating our comment policy.

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