Think Twice about Freezing Your Credit
Credit freezes become a popular recommendation after a major breach, but Kroll Investigators advise placing a fraud alert with the credit reporting agencies instead. If you are considering a credit freeze, it’s important to understand what a credit freeze is, as well as the benefits and limitations.
A freeze blocks access to your credit file so only the creditors and other businesses with whom you have a current relationship will have access to your reports (with certain exceptions). With a freeze in place on all three of the national credit reporting agency (CRA) reports, new creditors, lenders, landlords, insurance companies, cell phone and utility companies, and potential employers
will be unable to evaluate your credit history. Without access to your credit history, any application for credit or other services while the freeze is in place will likely be denied.
Benefits of a credit freeze include:
■ Minimizing the risk of credit identity theft.
■ If you are already a victim of identity theft, there is usually no charge to place, temporarily lift, or remove a freeze.
■ A credit freeze does not aff ect your credit score.
■ In most states, the freeze will remain in effect permanently unless a request is received from the consumer to temporarily lift or permanently remove it. In a small number of states the freeze expires after 7 years.
■ In order to be effective, a freeze must be placed with each of the three credit reporting agencies.
■ There can be a fee to place a freeze unless you are a proven victim of identity theft.
■ A freeze does not prevent fraud involving existing bank or credit accounts.
■ A freeze does not reduce the chance of existing account takeover, nor help prevent non-credit related issues, such as medical or criminal identity theft, or employment and tax fraud.
■ A freeze may not be effective with creditors, including payday loan companies and utilities, who do not run a credit check with the bureaus.
■ You must temporarily lift (or “thaw”) the freeze when you want your credit report to be available when applying for credit with a new creditor, potential employer, etc.
■ Fees to place and lift freezes, as well as the length of time a freeze is in place, will vary by state.
■ Credit bureaus have up to five days to place a freeze after receiving a written request. Your information may still be at risk during this time.
■ Credit bureaus have up to three business days to lift a credit freeze; this may be an issue if credit is needed immediately. Currently a few states such as Delaware and New Jersey have passed laws requiring the freeze to be lifted within 15 minutes of the request.
■ Each credit bureau requires a separate PIN to lift a credit freeze. If you lose your PINs, you will have to write to each CRA and provide proof of your identification to request a replacement PIN. A fee may be required in some states to replace the PIN.
Breaches can happen to any organization. That’s why it’s important for consumers to be vigilant about protecting their own information. If you are an IDShield member, you have already taken one of the most important steps towards protecting your identity in the event of a data breach. As part of your IDShield services, you have unlimited consultation with experienced Kroll Investigators who can help determine if your information has been used fraudulently; and if it has, help you to restore your identity to pre-event status.
Do you have Identity Theft Protection? Outstaffing offers employees a Legal Protection plan, composed of two components: LegalShield and IDShield. Sign up for one, or both! Learn more, or sign up here.
Global Fraud & Risk Report, Annual Edition 2016/17, Kroll