credit freeze

After the Equifax Breach, Is It Time to Freeze Your Credit?

The recent compromise of 143 million consumer’s personal information at Equifax has many people talking about the possible implications of this breach. Clinging to the hope that your personal information has still not been compromised by the Equifax breach or the other major national breaches over the last several years is now becoming hopeless.

Who hasn’t experienced some type of personal information or credit being stolen? The Equifax breach only stacks the deck a little higher against any dream left that we aren’t all at risk of thieves having already gotten our personal information that can be used for some form of identity theft.

The last line of defense we have is Credit Freeze with the three major credit bureaus, TransUnion, Equifax and Experian. Once completed, no new lenders will have access to your credit reports or credit history. New inquiries of credit will be blocked, and those lenders will not extend any new loans or credit cards until they know more about you. Once the freeze has been completed, only you and your existing creditors can gain access to your credit records.

This does not protect your existing credit cards from account takeovers. This means credit cards and open accounts can still be compromised. If your credit card is lost or stolen, it can still be used for example. Also, this does not protect you from identity fraud with the IRS tax scams. The IRS does not rely on these services from these credit bureaus to validate your taxes.

Is a Credit Freeze Right for You?

Freezing your credit reports is ideal if you already have a mortgage, automobile, established lines of credit and don’t foresee that changing anytime soon. If you are about to purchase a new house, car, student loan or additional credit cards, this might not be a good action to take until those business arrangements are closed. Some business owners may have their personal credit tied to the business lines of credit and may need to provide frequent access to these records. Everyone should be aware of lenders requiring access to their credit history before implementing a Credit Freeze.

This doesn’t mean you can’t undo a Credit Freeze for new creditors. It’s just a little more of hassle, and you must work with those three major credit bureaus to unfreeze your credit reports so legitimate lenders can gain access as needed.

What about a fraud alert offering from the credit bureaus or LifeLock? These are reactive notices about your credit activity and tell you when something with your credit has already occurred. While it can be helpful, this process doesn’t stop fraud.

If you elect to implement a Credit Freeze, you must complete a request form online or on the phone with the three major credit bureaus. There may be a small fee from each bureau depending on which state you reside. For now, Equifax has waived all fees for anyone placing a Credit Freeze. Part of the process includes each bureau providing you a person pin number to unfreeze later on. Do not lose these pin numbers, as it is very difficult to recover them, for good reason.

It is also highly recommended that you get a snapshot and monitor your credit activity from before you freeze your credit.

Finally, there are no fool-proof methods to stop all forms of identity theft, but a Credit Freeze is the best way to mitigate the risk.