What is a Credit Freeze?
Credit freezes, one of the best ways to protect against identity theft, work by freezing credit files with TransUnion, Experian and Equifax, enabling individuals to control who can access their credit scores and when, thereby blocking identity thieves from opening fraudulent credit cards or bank accounts. Lenders, retailers and other third party businesses will be unable to approve new credit, loans and other services without access to individuals' credit scores. Credit freezes last until an individual decides to permanently remove them, and it generally takes 5 business days for a credit freeze to take effect.
Placing A Credit Freeze
In order to place a credit freeze on a credit score, Equifax, TransUnion and Experian must be contacted separately. Once a credit freeze has been issued, individuals will be provided with their own passwords that enable them to defreeze their credit temporarily so that new credit accounts can be added, or that potential credits can access their credit scores. Credit freeze laws have been enacted in all states except for Alabama, Missouri and Michigan, and depending upon the state, there may be a fee for issuing a credit freeze or temporarily removing the freeze.
Credit Freezes for Seniors and Children
Identity thieves have been known to primarily target the elderly and children, because they are less likely to monitor their credit files as well as less likely to detect fraudulent activity. Therefore, it is especially important to give extra consideration to initiating credit freezes if an individual is a senior citizen, a senior citizen's guardian or a parent of a child.
In particular, seniors have less need to apply for credit, do not change residences often, will not open new bank accounts and rarely apply for loans. Because of this, seniors are less likely to detect identity theft, and when it does occur, seniors spend more time, on average, trying to restore their credit. Credit Freezes are an effective way of combating identity theft for the elderly. Some states, such as Louisiana, Florida, New Mexico and Pennsylvania even allow senior citizens to freeze their accounts for free.
Children are also increasingly becoming victims of identity theft. Because children have little reason to apply for credit until they are 18 years of age, it is easier for thieves to snatch their identities. Parents can place a freeze on their children's credit information until they reach legal age to protect against identity theft. Parents also have the added advantage of preventing their children from obtaining credit cards fraudulently.
Credit Freeze Drawbacks
It is important to keep in mind that credit freezes may delay, interfere with, or prohibit an individual from receiving timely approval of loans, credit, insurance and other services. Individuals are also not eligible to receive instant credit approval at a point of sale when they issue a credit freeze.
If an individual wants to apply for new credit, then the lender must have access to their credit score. They will need to temporarily lift their credit freeze to do this, which will take time and money. It is important to keep this in mind and plan ahead accordingly.
Identity Theft Protection Companies that Offer Credit Freezes
- TrustedID, one of the current leading identity theft protection companies, offers an add-on service to IDFreeze called CreditLock, where they will initiate and monitor a credit freeze for individuals once they have authorized one by contacting Equifax directly. Their plans start at $7.42/month.
- Equifax ID Patrol, an identity theft protection service that Equifax credit agency offers, will freeze individuals credit files and contact the other credit bureaus for an additional fee. Their plans start at $14.95/month.
Credit Freeze Resources
To learn more about credit freezes, please visit:
- The Consumers Union's Guide to Security Freeze Protection - http://www.consumersunion.org/
- Fight Idenity Theft Credit Freeze State Laws - http://www.fightidentitytheft.com/credit-freeze-laws.html
- Experian Security Freeze - http://www.experian.com/consumer/security_freeze.html
- TransUnion Security Freeze FAQ - http://www.transunion.com/securityFreeze