Published in: Credit Cards | Nov. 20, 2018

Credit Freezes Started in September -- Here's How They Work

Starting Sept. 21, you can freeze your credit for free. Find out what a credit freeze is and why you might want one.Credit card in iceImage source: Getty Images 

In today's digital world, data breaches happen with alarming frequency. Every time your personal information falls into the wrong hands, the risk of identity theft grows -- which means most of us face a pretty significant risk since more than 22 million records were unlawfully accessed in 2018 alone.

Protecting yourself against misuse of your personal information can be a challenge, but there's one technique that's almost foolproof: freezing your credit. Unfortunately, freezing your credit can be a hassle and, until recently, it used to cost money.

But, starting Sept. 21, credit freezes will now be free for everyone -- and freezing your credit is something to consider if you're worried about anyone opening new accounts in your name.

Freezing your credit prevents new credit from being opened

When you freeze your credit, you alert the three major credit reporting agencies -- Equifax, Experian, and TransUnion -- that no one is allowed to access your personal information. This effectively prevents new accounts from being opened in your name since lenders check with these credit reporting bureaus before extending credit.

After your credit is frozen, if a thief tries to apply for a credit card or loan using your information, the creditor will contact one of the credit bureaus to decide whether to approve the application. They'll discover a credit freeze and the thief will be thwarted.

The problem is, when you try to get your credit checked for a legitimate reason -- such as signing up for utility service, a credit card, or completing a background check -- your personal information will still be on lockdown and you won't be able to move forward.

If you need to allow access to your credit reports so you can complete your own financial transactions, you'll need to contact the credit bureaus and provide a special PIN number. This can be a hassle, but it ensures your information is made available only when you want it to be.

Freezing your credit used to cost money -- but it won't after Sept. 21

While freezing your credit provides the strongest possible protection from identity theft, it used to be a costly process. You'd have to pay to freeze your credit and pay for your credit to be unfrozen.

However, the Economic Growth, Regulatory Relief and Consumer Protection Act, signed into law May 24, changed the rules and made it free to both place and remove a credit freeze. This means starting Sept. 21, you'll be able to use a security freeze to help you fight identity theft.

How to freeze your credit

If you decide to take advantage of free credit freezes to make your credit report inaccessible without your express permission, you can freeze your credit by contacting each of the three major credit reporting agencies either online using the following links or via phone using the following phone numbers.

You'll need to provide personal information to confirm your identity. During the process, you'll either be provided with a PIN number online or via mail and you’ll need that PIN to unfreeze your credit report at any time in the future.

Unfreezing can be done online or via phone if you need to allow someone to access your credit report for legitimate purposes.

Freezing your credit can be worth the effort

While it may seem like a hassle to freeze and unfreeze your credit, it's often worth the effort to ensure your information isn't misused to apply for credit in your name or take other actions that could damage your credit score.

Now that freezing and unfreezing your credit is free, taking this step as a preventative measure can make a lot of sense -- especially if you have reason to suspect your data has been compromised by one of the many regular breaches that occur.

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