Q&A: Credit freezes

Dear Liz: Is there a way to lock my credit history and access to prevent the unscrupulous from opening accounts in my name? Maybe I’m rare, but I have enough existing credit cards, don’t have a mortgage and essentially have no debt, and I want to keep it that way. I suspect businesses that make their living issuing credit reports will resist this ability, but I want to do all I can to make it tough for anyone to steal my identity.

Answer: You can lock up your credit reports with what’s known as a credit freeze (also called a security freeze). The three major credit bureaus — Equifax, Experian and TransUnion — have information about how to do this on their websites. You also can find general information about credit freezes on Consumer Reports’ site.

Credit freezes can prevent new account identity theft — someone opening new credit accounts in your name. Lenders typically check credit reports when they get new credit applications. If they can’t access your reports thanks to a credit freeze, they’re unlikely to approve the application.

Of course, the freeze applies to you as well. If you change your mind and want to apply for a new account, you’ll need to temporarily thaw the freeze.

Other entities also check credit reports, so you may need to lift the freeze if you apply for a job, insurance, new utilities or cellphone service. You typically have to pay fees (which range from $2 to $15, depending on your state) to each bureau to lock up your credit and another set of fees to thaw it.

Credit freezes won’t interfere with your ability to use your credit cards or prevent your current lenders from accessing your reports.

Credit freezes also won’t prevent other types of identity theft, including tax refund fraud, medical identity theft and criminal identity theft (which occurs when criminals give law enforcement your information when they get arrested, rather than their own).

Still, credit freezes are a good solution if your identity has already been stolen or you’re at high risk because your Social Security number has been swiped or exposed in a data breach.

Credit bureaus may suggest you put a temporary fraud alert on your reports instead, or pay for credit monitoring or identity theft “protection” (which actually doesn’t protect you against anything but simply offers an early warning if your reports are compromised). A credit freeze is a more secure solution, but you have to weigh the potential hassle and cost against the benefit.

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Comments

  1. In response to the Q and A on Credit Freeze anyone considering this as opposed to a temporary Fraud alert needs to know that credit scores are used by LexisNexis in determining your Insurance Score. LexisNexis works with virtually all US insurers. If they cannot access credit it will likely affect or even prevent a score with result of a substantial increase in insurance premium. I am currently working with state and US legislators to try and give consumers better protection against misuse of Insurance Scores. My circumstance similar to the Q but were I to put a credit freeze on my accounts my insurance premiums would go up more than 30% at USAA with whom I have had insurance for 50 years in 2016 with very low premiums do to good Insurance Scores (no adverse CLUE, DMV or credit items affecting score). Unfortunately Insurance Scores are a “black box” utilizing the other “black box” of credit scoring. While consumers are pretty much aware of credit scores very few are familiar with Insurance Scores. A google search will turn up discussion of this issue.