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Protecting your personal information is more important than ever. Data breaches, where hackers steal sensitive data from companies and institutions, are becoming alarmingly common. For example, in 2005, around 67 million individuals were affected by data breaches. By 2022, that number skyrocketed to over 420 million. Identity theft is also on the rise, accounting for more than a quarter of all reports to the FTC. The most frequent types include government document fraud and credit card fraud. Stay vigilant, stay informed, and take proactive steps to safeguard your personal information.
Identity theft can turn your life can be turned upside down if you were to become a victim. Managing your credit is an essential aspect of maintaining your financial health and protecting your identity. Because of this you may want to consider freezing your credit.
What is Credit
Credit is an agreement where a borrower receives something valuable and commits to repay the lender with interest at a later date. A three-digit number, known as a credit score, is used to measure creditworthiness. Nowadays, lenders often rely on the FICO credit score to assess borrowers.
This number provides potential lenders with an objective assessment of your credit risk, indicating the likelihood of repayment. In essence, it measures trust and reflects the lender's confidence in the borrower's ability to repay their debts.
Why Credit is Important
Protecting your credit score is important for several reasons. It affects your ability to obtain loans and credit cards. Lenders are more willing to offer better terms such as lower interest rates or higher borrowing limits to people with higher credit scores.
Your credit score can impact other aspects of your life such as employment opportunities and insurance premiums. Many employers, especially those in financial sectors, check credit scores during the hiring process. Insurance companies also use credit scores to set premium rates.
Freezing your Credit
A credit freeze, also known as a security freeze or credit lock, allows you to restrict access to your credit report. This is particularly useful in preventing credit, loans, and services from being approved in your name without your consent.
To freeze your credit, you'll need to contact the three major credit bureaus – Experian, Equifax, and TransUnion. While the process might differ slightly across each bureau, generally you'll be required to supply your personal information, including your Social Security number. Most often, you can execute a credit freeze online, over the phone, or by mail.
When you want to freeze your credit, you’ll be asked to set up an account with each of the three credit bureaus. You may asked questions to verify your identity as well when setting up the freeze. Make sure you save your username and password somewhere safe when setting up the account, so you can make any changes to the freeze you need to in the future.
It's important that you reach out to all three of the credit bureaus. Contact information for freeze request for the 3 main credit bureaus:
Experian
- Online - https://www.experian.com/freeze/center.html
- Phone - 888-Experian (888-397-3742)
- Mail - Experian Security Freeze; P.O. Box 9554, Allen TX 75013
Equifax
- Online - https://www.equifax.com/personal/credit-report-services/credit-freeze/
- Phone - 888-298-0045
- Mail - Equifax Security Freeze; P.O. Box 105788, Atlanta GA 30348
TransUnion
- Online - https://www.transunion.com/credit-freeze
- Phone - 800-916-8800
- Mail - TransUnion LLC; P.O. Box 160, Woodlyn PA 19094
Reasons for Freezing your Credit
There are several reasons why you might want to freeze your credit. The primary reason is to prevent identity theft. The last thing you want is someone gaining access to your credit using it without your permission.
With your credit frozen, potential fraudsters are less likely to open new accounts in your name. This could be important if you suspect that your personal information has been stolen or shared in a data breach. Other reasons to consider include, if you been notified of a fraud alert on one of your accounts, you've been a victim of credit card fraud in the past, you're in the middle of a divorce, or you want to limit the number of hard inquiries on your credit report. A credit freeze can provide peace of mind during uncertain times.
Monitor your Credit Report
Even if you’ve frozen your credit, it’s always good to keep an eye on your credit report. Federal law (the Fair Credit Reporting Act) grants you the right to access your credit report for free once a year. Make a habit to check your credit files yearly at a minimum to ensure nothing is out of the ordinary. You can access your free credit report at:
- Online - www.AnnualCreditReport.com
- Phone -877-322-8228
- Mail - Annual Credit Report Request Service; P.O. Box 105281, Atlanta GA 30348
You may also have an option to enroll in a credit monitoring service. If your information was stolen in a major, news making breach, the company or organization may offer you a credit monitoring service for several months or years. If you aren’t offered a free option, you do have the option to purchase a credit monitoring service.
When to Thaw your Credit
As crucial as it is to know when to freeze your credit, it's equally important to know when to unfreeze it. Unfreezing your credit is necessary when you need to apply for credit. It's also advisable when you're looking for a job, especially if your potential employer needs to perform a credit check. Remember, you'll need to contact each credit bureau to lift your credit freeze.
You may be able to “temporarily” thaw your credit. This is a feature that allows you to tell the credit bureau to unfreeze your credit for a specified period of time. When the time expires your credit will automatically freeze again. This is very handy if you know that you will be applying for a mortgage, a new credit card or a loan and that they will need access to your credit report.
Taking advantage of a credit freeze is an effective tool in protecting yourself against identity theft and other financial frauds. If you have spent time building and establishing good credit you will want to protect it. Victims of identity theft can sometimes take years to repair their credit and reclaim their good name.
If you have no plans to open any new accounts anytime soon, it might be a good idea to freeze your credit. If you decide to do it, make sure you understand the process for freezing it, what limitations that will mean to you while it’s frozen and when to unfreeze or thaw it.
Your credit is a significant component of your financial identity, and hence, should be managed carefully.
