Our family has six bicycles that we love to ride together. We have them all stored in the shed in our backyard. That’s close to $2500 worth of two-wheeled goodies I’ve got locked away in there! And I do mean locked away. It’s amazing how just one little $6 lock can keep expensive possessions like my treasured Radwagon safe and secure.
Well, the same is true of your credit. Having your identity stolen by an identity thief can cause untold harm and difficulty. It can become a new part-time job getting things sorted out. Yet the mechanism for ID theft prevention is as elementary a solution as my cheapo lock – and the answer is freezing your credit.
You might think that you don’t have anything to worry about when it comes to your credit being stolen. “Don’t be paranoid,” you might say. And I would have been inclined to agree with you – until 2017 that is.
Just four years ago one of the largest credit bureaus, Equifax, had its systems breached. 148 million social security numbers were compromised in the process. This drove home the massive importance of a credit freeze. At this point I believe that everyone should be freezing their credit.
I don’t want to incite a panic, but when the solution to protecting yourself is so simple, there’s no reason not to shield your credit from potential mayhem.
What’s a credit freeze?
If you haven’t heard of a credit freeze before, let me explain how it works. Freezing your credit allows you to restrict access to your credit report, making it almost impossible for identity thieves to open new accounts in your name. It shuts would-be criminals down cold.
Even if a nefarious person has your private information in their possession and tries to use it to open a new credit card account, let’s say, they won’t be able to do it because of the added security that your new credit freeze provides. That’s because most creditors need to see your credit report before they approve a new account. If they can’t see your file, they won’t approve it.
You need a credit freeze to prevent criminal activity using your name and good credit. You’re not financially responsible for the fraudulent activity that might occur if you don’t freeze your credit, but the hassle of fixing the damage that an identity thief might create can’t be overstated.
These options are inferior to freezing your credit
You’ve probably seen an ad for credit monitoring before. The CEO of one of the major monitoring companies even put his social security number out there for everyone to see on national commercials. That didn’t work out too well for him though as his identity has been stolen 13 times! So if you decide not to freeze your credit and instead opt to pay a company to monitor your credit, that will often set you back around $10 a month. Those costs add up.
And what are you really getting for your money? Credit monitoring is inferior to freezing your credit in basically every way. If you want a company to help you keep taps on your credit, at least opt to get it for free from a company like Credit Karma instead.
Credit locks have become another option for folks looking to shut down scammers who might attempt to steal their identity. But similar to credit monitoring, it’s not as good of a tool as the credit freeze either. That’s because credit freeze is a right guaranteed and governed by federal law. Credit locks are subject to the policies and fine-print of each of the credit bureaus. And there’s an added layer of security to the credit freeze that doesn’t exist with a credit lock.
In addition to that, locking your credit via one of the bureaus or third-party service will often cost you money in the form of recurring subscription fees! And those fees aren’t cheap.
The bureaus, of course, want to make the credit lock products that they offer sound like the greatest thing since sliced bread. That’s because they stand to benefit financially if you sign up.
Credit Lock vs. Credit Freeze
Both credit locks and credit freezes do kind of the same thing: limit access to your credit report. But, credit locks are expensive (and less effective) and credit freezes are FREE (and offer more protection!). Go with credit freezes!
Experian, for instance, charges $24.99 a month to lock your credit. That’s almost $300 a year! And it would still leave your credit at risk with the other major bureaus. Locking your credit with the major bureaus is basically like tossing a few hundred bucks directly into the incinerator.
So while there are lots of similar-sounding options that all claim to help you keep fraudsters from stealing your identity while keeping your credit in tip-top shape, don’t believe them. The only option worth considering is freezing your credit. Every other option is a cheap imitation that will cost you money.
But freezing your credit won’t cost you anything!
Freezing your credit won’t cost you a dime
Interestingly enough, it used to cost money to freeze your credit. The specific cost varied by state and it was a pain for everyone. But thanks to federal legislation in the wake of the Equifax fiasco, you can now freeze your credit with each of the major credit bureaus without paying a dime.
When protecting yourself costs zero dollars and only takes five minutes, there’s no excuse to not take advantage!
How to go about freezing your credit
Since there are 3 major credit bureaus you’ll need to freeze your credit with each one. Freezing your credit with just one or two will still leave your identity vulnerable. Fortunately, the process is simple and can be done in a matter of minutes on each of their websites.
Here are the direct links:
- Experian: freeze your credit for free
- Equifax; freeze your credit for free
- TransUnion: freeze your credit for free
You’ll need to have some information at the ready when you sit down to freeze your credit with each bureau including your name, address, date of birth, and social security number. You’ll also be asked some questions about where you’ve lived and accounts you’ve opened to prove that you are who you say are.
Once you’ve finalized everything, your credit freeze will be active within one business day. You should be able to knock out all three in 5 minutes or less. Set that timer on your phone and see if I’m lying! 🙂
You can thaw your credit at any point for free
Once your credit is frozen, that doesn’t mean you won’t be able to use it ever again. You will need to thaw your credit in order to sign up for a new credit card offer, apply for a mortgage loan, or to even change cell phone providers in some cases.
Just like freezing your credit is free, thawing it is also complimentary. Just make sure that you keep your username and password handy so that you can easily log in on the credit bureau websites to perform that thaw.
You could attempt to lift that freeze by calling the credit bureaus or doing it via snail mail. But that will only make the process take longer. So opt to freeze and thaw online for the sake of simplicity.
The thawing process doesn’t usually take very long when you opt to initiate via the credit bureau websites, but it’s still best to begin that thaw at least 24 hours ahead of applying for a new line of credit.
Related: Best credit cards for consultants!
You can freeze your child’s credit too!
Freezing credit isn’t just for grown-ups. Kids should have their credit frozen too! When most people hear that it seems weird. Kids aren’t using credit so why in the world would you need to freeze credit that they aren’t using!?
I understand where that question comes from. But sadly, criminals have abused the credit of many minor children over the years. They open up cards in the name of minor and devestate their credit before they are even old enough to be using it. In 2017, over one million children had their identity stolen. And that heinous act is often committed by a close friend or family member. That is why you should consider freezing your child’s credit.
It’s a little more complicated than freezing your own. But it’s still time well spent to make sure that your offspring won’t experience the difficulties that come with a stolen identity either. It’s important to gather copies of the necessary paperwork before you get started here. That’s because you’ll be sending documents via snail mail to the credit bureaus to get this freeze in place. You’ll need to have copies of your state-issued ID, a current utility bill, their birth certificate, and their social security card along with sending in a form that the bureaus provide.
Here’s the form to freeze your child’s credit with Experian.
Here’s the form to freeze your child’s credit with Equifax.
TransUnion, as you might expect, throws a wrench in things. They ask for you to send a written request their way in order to get the freeze in place. Here’s the link where you can see the full details of how to go about setting up that freeze with the most persnickety of the credit bureaus.
What freezing your credit won’t do for you
Freezing your credit prevents people from opening up new lines of credit as if they were you. It means you won’t have to worry about someone opening up a new credit card or even buying a new car using your identity.
But freezing your credit doesn’t solve every potential credit problem. If you lose your credit card, someone can still rack up charges on that account – causing you some headaches. Granted, you’re only responsible for a maximum of $50 of those charges thanks to the Fair Credit Billing Act. That is not the case for debit cards though.
Some people hope that freezing their credit will prevent offers from coming in the mail to open up new lines of credit. But that’s not the case. If you want to stop getting credit card solicitations in your mailbox, you need to go to Optoutprescreen.com instead.
Freezing your credit won’t help or hinder your credit score either. Handling the credit that you have wisely is what will allow you to continue to see your score rise.
And if you’re worried about not having access to your federally guaranteed free credit report every week, don’t worry. You can still go to AnnualCreditReport.com and get those even if your credit is frozen.
Freezing your credit is majorly important!
Most people don’t know just how important it is to freeze their credit. The risk of identity theft is higher than ever before.
But fortunately, the solution is just as simple. And it’s free too. There’s really no excuse not to freeze your credit right now!
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