3 Reasons I Like Credit Freeze

Courtesy of Ella & Eva Cowan, Anchorage, AK  2018

Equifax is one of the three major credit reporting agencies.  These companies gather your personal information, package up the data points and then sell it off to marketers or stratify it into a credit score.  In September 2017, Equifax allowed the data for 143 million people to be stolen.  Many people reacted by responding with demands the United States government should do something to protect our sensitive data.  Really?  Check out the examples from digitalguardian.com on the government’s track record of protecting the data of its citizens so far:

  • Tricare: 4.9 Million Affected (September 2011)
  • S. Department of Veteran Affairs: 26.5 Million Affected (May 2006)
  • S. Office of Personnel Management (OPM): 21.5 Million (June 2015)
  • National Archives and Records Administration (NARA): 76 Million Affected (October 2009)
  • S. Voter Database: 191 Million Affected (December 2015)

I have received notices from at least four of the incidents and I understand that preventing a data breach may be difficult.  However, the ability to take action and prevent a bad actor from opening new lines of credit in your name is simple.  In the spirit of education, I offer up peace of mind, saving money and a momentary pause as three reasons why a person should implement a credit freeze as soon as possible.

Peace of Mind

The process known as a credit freeze became available across all 50 states in 2007 and is also known as a credit report freeze, credit lock, credit lock down or security freeze.  As the names imply, a credit freeze makes your credit information immobile and prevents your credit file from being accessed by a business – your credit information is behind bars.  Therefore, that business can not issue any type of new credit.  The result is that a criminal cannot open a new credit card, car loan, mortgage, phone service or any other product that requires a credit score.  Despite the numerous data breaches, flow of personal information around work or traveling around the world, my peace of mind results from knowing my credit identity is protected.

Save $180 Annually

Is credit monitoring worth $180 a year?  Despite this service being heavily marketed and recommended by certain financial experts, the short answer is: NO.  Credit monitoring only tells you that you have been violated after identity theft has occurred.  For me, that is way too late.  I would rather keep my $180 and prevent a huge problem from ever happening.  Another reason to not pay for monitoring services… monitoring is available for free from websites like CreditKarma.com.

Speed Bump for Credit Applications

A person receives a specific code to thaw or unlock credit information after a credit freeze is enacted.  This pin allows a person to login into a credit reporting agency and release your credit score on an as needed basis for a designated length of time.  The process to unfreeze credit can take around five minutes per agency.  Therefore, this extra step may be just enough time to contemplate that next application for a credit card and prevent a compulsive action.  For me, this time forces me to go through my checklist to determine if I need another credit card.

Steps to Freeze Credit

A person needs to visit the websites for Experian, Equifax and Transunion.  A link will be displayed at each agency or the link can be found with a web search.  A person will follow the links, provide verifying information, pay a small fee and receive a pin number associated with the frozen account.  Each agency offers a phone and mail option.  If a person has moved many times over the years, I recommend having past mailing addresses readily available.

Conclusion

So if my two daughter decide to ask me one day, I will tell them I am a big believer in having a credit freeze in place.  It is a defense mechanism that has decreased our household anxiety during our global travels and when our personal information is submitted online or on other physical forms.  The minimal fees were worth every dollar and I hate spending money.  For more information and a second opinion on the matter, I recommend Clark Howard’s Credit Freeze guide.  I wish you the best toward financial security, freedom and adventure.

Post Script

  • Fees for credit freezing and thawing vary by state
  • Congress is considering removing credit freeze fees – better late than never
  • Register for credit score tracking sites (i.e. Credit Karma, Quizzle…) before implementing a credit freeze
  • Existing credit cards can still be hacked – that is your bank’s security problem
  • Keep your credit agency pin or code forever

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