FREE CREDIT FREEZES – Coming Soon!
Thanks to a newly enacted bill, sometime in September, consumers can take advantage of Free Credit Freezes. Because a credit freeze needs to be placed with each one of the three credit bureaus, the new law will help save consumers some money.
The legislation was added as part of the Dodd-Frank bank deregulation bill, passed by Congress earlier this year. The law allows consumers to either place, lift or remove a credit freeze absolutely free of charge.
Before this new law, depending on which State you lived in, consumers had to pay between $2 and $10 to place a freeze. The only way a consumer could get a no-cost credit freeze was if they could prove they were a victim of identity theft.
Brought On By Equifax Breach
Following the Equifax data breach, the advice given by most experts was to place a separate credit freeze with all three of the credit bureaus. You may recall, the Equifax breach exposed the personal data of 148 million Americans. Because social security numbers were exposed in that breach, placing a credit freeze was a consumer’s first line of defense. A credit freeze protects a victim’s credit account by virtually locking access to it. This prevents crooks from applying for credit, using your stolen social security number.
Companies would never approve a loan or a credit card application unless they are able to do a credit check – to see if you are creditworthy. Once a freeze is in place, companies are prevented from checking or viewing your credit file. Therefore, placing a credit freeze protects a consumer from criminals trying to get credit in their good name. Keep in mind that if you yourself wants to apply for credit, you will need to temporarily lift your credit freeze, so that the lender can gain access to your credit file.
NOTE: There’s a difference between a credit “Lock” and a Credit “Freeze”!
Equifax has been offering free credit “Locks” for life as part of its response to their massive data breach. But consumers should be aware that credit “Locks” are NOT the same thing as placing a credit freeze. Credit Locks don’t offer the same consumer protections. They are virtually just an agreement between you and Equifax that can be subject to changes down the line.
Trans Union and Experian also offer their own versions of credit “Locks”. Warning: there are fees involved! Anna Laitin, the director of financial policy with Consumer’s Union recommends freezes rather than credit locks because the rules for credit freezes are established by law. “Consumers will know what they’re getting with a freeze”, she said.
~ See an article I wrote about Credit Locks vs Credit Freezes
CHILD ID THEFT
Children have become a prime target of identity thieves. A million American children became victims of identity theft last year at a cost of 2.6 billion dollars in total losses to the families. Once a thief is able to get identifying information on a child, such as the child’s Social Security number, they can open a credit report on behalf of the child and obtain credit in the child’s name. Fortunately, a provision in the new law also allows for parents or guardians of children under age 16, to set up a credit report and then freeze it at no cost.
What about Fraud Alerts?
Another benefit of the new law also extends the time limit on fraud alerts. A fraud alert is usually placed to notify the credit bureaus if a consumer suspects they might be a victim of identity theft. Fraud alerts require businesses to verify an application for credit before giving approval. Originally, a fraud alert was only good for 90 days and had to be renewed again every 90 days for the alert to remain on a consumer’s credit file. The time limit has now been extended from 90 days to a full year.
So, if you haven’t already placed a credit freeze, once September rolls around, you may want to take the advice of experts and place one for FREE!
Please read a previous article of mine if you want to learn more about How to Place a Credit Freeze.