Starting Sept. 21, credit freezes will be free in all 50 states
Ted Rossman has seven years of experience in the credit card and personal finance industries as a member of the award-winning communications department at CreditCards.com and its sister sites The Points Guy and Bankrate.
Are you frustrated with all the data breaches that keep happening?
Then I have some good news. Starting Sept. 21, credit freezes will be free in
all 50 states. That means you can stop anyone from opening new credit in your
name, and unlike the prior system, it won’t cost you a penny.
Think of a credit freeze as a state-of-the-art home security
system that helps keep the bad guys out, versus credit monitoring, which is
more like that text message you got from a neighbor after someone already
smashed through your living room window and walked off with your big-screen TV.
In the latter case, the damage has already been done, so the alert isn’t all
See related: Credit monitoring: When is it worth paying for?
New federal law removes freeze fees
Credit freezes have been around for a while, but until this
new federal law takes effect, they can be pricey. In most states, each of the
three major credit bureaus (Equifax, Experian and TransUnion) has been charging
up to $10 apiece for a credit freeze and another $10 to lift the freeze when
you want to legitimately request new credit. That’s all about to change.
The new law was spurred in large part by the massive Equifax
data breach that exposed the personal information of roughly 150 million
consumers in mid-2017. After years of high-profile breaches involving popular
retailers (Target, The Home Depot, etc.) and websites (remember when 3 billion
Yahoo accounts were hacked?), the Equifax breach proved to be the straw that
broke the camel’s back.
These have been sad episodes for consumers, but real,
positive change is coming soon. Once the fees are eliminated for freezing your
credit, this is a step everyone should take advantage of. Just know that you’ll
need to use a PIN to thaw your credit before you apply for a new credit card,
mortgage or other type of loan. A thaw can sometimes be done in minutes, but
ideally, you’ll initiate the request about three days beforehand to avoid any
potential problems. It’s a minor logistical hurdle but well worth it.
To sign up, you’ll have to register with each of the big
three credit bureaus on their websites: Experian, Transunion
See related: Free credit freezes are coming, but similar options already exist
What if you’ve already been a fraud victim?
If you noticed an unauthorized charge on your credit card
statement, contact the card issuer online or by telephone. You shouldn’t be liable
for any fraudulent charges (assuming you notified them promptly), and this is a
pretty easy fix. You’ll likely get a new card (with a new number) within a few
days and the inconvenience should be minimal.
If you’re dealing with more of a full-blown identity theft
situation (someone opened new accounts in your name, for example), it’s going
to take more time and effort to resolve. Start by reporting the incident to the
Federal Trade Commission at IdentityTheft.gov. Next, file a police report.
The FTC and the police should help guide your subsequent
course of action. It will probably involve placing a fraud alert with one of
the three major credit bureaus (whichever one you choose is required to inform
the other two). You’ll likely also end up dealing directly with a financial
institution. For example, if a fraudster opened a credit card in your name,
you’ll probably need to communicate with that card issuer to sort things out.
Identity theft can leave a big mess behind. The FTC
estimates it takes victims about 30 hours’ worth of phone calls, emails and
other persistence to unwind all the damage. Taking the proactive approach of
freezing your credit, which is about to become easier and cheaper than ever, is
a strong step toward avoiding this unpleasant chore. After all, there have been
so many data leaks that it’s a question of when – not if – your information
falls into the wrong hands.