By Adam Singer, helping consumers with credit report errors to obtain corrections and compensation under the law. | Credit Report Law Group.
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Identity theft happens each day, throughout the day. One source of identity theft is security breaches, where sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so. According to the Identity Theft Resource Center, almost 1,300 data breaches took place in the first nine months of 2021. Two areas of concern with identity theft are new account fraud and account takeover of credit cards. A thief either opens up a new account or takes over an existing account with banks such as American Express, Discover, Chase, Wells Fargo and the like. It was reported that almost 48% of account fraud involved accounts less than one day old; and in a survey of financial institutions, 72% polled stated that account takeovers were their leading concern. With this information, we can see that both new accounts and accounts already being used are primary security concerns.
As a consumer, what can you do to help protect yourself from identity theft? In a previous article, layers of protection were listed as ways to protect one’s consumer credit file. Another layer of protection that can be used is a security freeze, a.k.a. a credit freeze.
A credit freeze is a free service and is designed to prevent credit or loans from being approved in your name without your consent. A credit freeze is not a 100% protective measure, but it is more stringent than a security alert.
A credit freeze is designed to prevent new credit applications from being approved by preventing potential creditors from inquiring and accessing your credit file. A credit freeze will allow creditors you already have a relationship with to access your credit file. For example, if you have a Capital One credit card and your card is listed on your credit file, you have an existing relationship with Capital One and Capital One will have access to your credit file.
You can request a credit freeze online or via mail or telephone. You will need to contact each national credit reporting agency (NCRA)—Equifax, Experian and TransUnion—separately to request the credit freeze.
After your file is frozen, confirmation will be sent to you by the NCRA from which you requested the freeze. This confirmation will contain a personal identification number which will be needed to remove the freeze or thaw your credit file. The NCRA may give you the option to choose your unique PIN. It is important to keep each PIN from each NCRA in a safe place. A credit freeze can be removed temporarily or permanently via online, mail or telephone, and your PIN will be needed to do so.
Freezing your credit file is supposed to happen in real time; however, the NCRAs state on their websites that it may take between 15 and 60 minutes to add or remove a freeze.
Once the credit freeze is in place, you will need to remove your freeze temporarily in order for potential creditors to access your credit file. Typically, you can decide to unfreeze or thaw your credit file from one day to a specific date in the future. When unfreezing your credit file, there may be default options for three, seven or 15 days that you can choose. The number of days you choose to unfreeze your credit file should be thoughtfully considered. A key reason is that once you thaw your file, your file is available for credit inquiries until the last day chosen. For example, if you choose to thaw your file for 15 days, it will be available for potential creditors to inquire until the end of the fifteenth day and cannot be typically refrozen before the end of the fifteenth day. At the end of the chosen day, your credit file will automatically become frozen again. There is no need to contact the NCRA at the end of the unfrozen period to refreeze your credit file.
Lenders often require business owners to submit personal credit checks in order to obtain needed working capital by way of loans. The savvy business owner may want to be familiar with these procedures given the overlap between business ownership and personal credit. Consider whether a preemptive freeze is warranted (before any signs of ID theft) to protect access to credit. That freeze can be thawed selectively as needed.
If, at some point, you believe you no longer want your credit file frozen and you don’t want to manage a credit freeze, you can request to have your credit freeze permanently removed.
In summary, a credit freeze, or security freeze, is a layer of protection for your credit file. It is one of the strictest credit file protection measures a person can take regarding their credit file. The credit freeze must be requested separately from each NCRA. Once in place, you will be sent a PIN that allows you to manage your security freeze.
Until next time, be safe.
