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Freezing your files in the three major credit reporting agencies – Equifax, Experian and TransUnion – is one of the best ways to protect yourself from financial identity theft. Starting September 21, everyone can do it – for free.
Until now, it could cost up to $ 10 to freeze your file at each credit bureau, depending on your age and your place of residence. This same tax applied to thaw or "thaw" the file if you wanted to apply for credit. And then, you had to pay again to refreeze it.
Following the mega-breach of Equifax's nearly 148 million personal records last year, Congress passed legislation requiring credit bureaus to offer this important fraud protection free of charge. Now you can freeze and defrost and refreeze your account as many times as you like and it will not cost you anything.
"We are confident that consumers will benefit from this new legislation," said Eva Velasquez, President and CEO of The Identity Theft Resource Center. "This is one of the most proactive measures consumers can take in terms of consumer protection."
A recent national survey by NerdWallet, a financial advisory website, found that only 10% of Americans had frozen their credit records after the Equifax breach.
"Although people are very concerned about their financial security, they do not really take the necessary steps to protect themselves," said Kimberly Palmer, personal finance specialist at NerdWallet. "Some people think they are too busy or too much of an effort, or that it can be the cost that holds people back."
Seventy-five percent of the 2,500 adults who responded to the NerdWallet survey said they risked freezing their credit if their information was violated, if it were free.
How does it work and what will it do?
A security freeze restricts access to your credit report, to prevent anyone from opening new accounts or taking out loans on your behalf, even you. To apply for a credit, you must defrost the account. It is also important to know that:
- A credit freeze does not affect current financial relationships and therefore does not affect your credit card accounts, loans or mortgages.
- A freeze does not hurt your credit score.
To secure your credit files, you must request a freeze on each of the three offices. After verifying your identity and answering certain questions, you will receive a PIN code for this account which must be used to freeze or thaw the account.
Do not forget: the websites of credit reporting agencies are designed to sell you products and services. Use these direct links:
The new law also requires a quick response to your requests:
- Request a freeze online or over the phone and the credit reporting agency must set the freeze up no later than the next business day.
- If you want to lift the freeze, it must occur within the next hour.
Equifax, Experian and TransUnion told NBC News BETTER that they have prepared for the new law by facilitating freezing or thawing.
"A freeze may not be for everyone, but we want to make the process as simple as possible," said Rod Griffin, director or head of public education at Experian. "With the problem of identity theft today, it is essential that people participate in the process and know what is happening with their credit report."
TransUnion is the only office to provide an application to control the process. Using the free myTransUnion app for Android and iOS devices, you can freeze or thaw your account instantly. You can even schedule an automatic refreezing so you do not forget to do it.
"We want people to feel that they have control and that they can protect themselves, but we also want to eliminate any friction of this process for consumers," said John Danaher, president of Consumer Interactive. at TransUnion.
NOTE: If you have already frozen your files, there is nothing to do. The offices will just stop charging you. If you have a fraud alert in place (not as robust as a freeze), it will now be extended for one year from the date it was launched.
New law makes it easier to protect your children
Most children do not have a credit report, but they can still be targeted by identity thieves who want to use this unblemished credit history for harmful purposes. Last year, more than one million children in the United States were victims of identity theft, resulting in losses of $ 2.67 billion, according to the 2018 study of the identity of children led by Javelin Strategy & Research.
The Congress facilitated the protection of minors and guardians through a set of state laws making the process uniform and free for all. You can do it online by going to the Equifax, Experian and TransUnion websites.
A freeze versus a lock – and what about credit monitoring?
TransUnion and Experian offer a free credit lock, similar in many respects to a security freeze. Consumer advocates contacted by NBC News BETTER all recommend freezing, now that it's free.
"Credit freezes are a legally required right and are not subject to conditions set by companies as are credit locks," said Mike Litt of the US PIRG. "Your rights as a consumer are stronger with the credit freeze."
If you sign up for Free Credit Blocking at Equifax or TransUnion, your information may be used for marketing purposes. They can not do that with a gel, said Litt.
Do not confuse a freeze – or even a blockage – with a credit watch that looks for potential signs of fraudulent activity.
"A security freeze is the single most effective thing you can do to prevent identity theft," said Chi Chi Wu, a lawyer with the National Consumer Law Center. "If you get free credit monitoring, it's not hard to combine it with a freeze, but credit monitoring does not stop identity theft – it just warns you of a problem. It does not prevent the horse from coming out of the barn; all he's doing is telling you that the horse is gone.
A gel is not a quick fix
A security freeze is an important tool in the fight against fraud, but it does not stop all forms of identity theft, but only the creation of new financial accounts on your behalf. You are still vulnerable to existing account fraud, where a scammer steals your credit or debit card number and starts buying items.
That's why you have to do many other things to protect yourself:
- Check your bank and credit card accounts at least once a week and look for any suspicious activity.
- Set up alerts on your bank and credit card accounts to keep you informed in real time of what's happening to your accounts.
- Get your free credit reports once a year and check for errors or anything questionable.
- Watch your credit score for unexplained and dramatic changes that could signal fraud.
MORE CREDIT ADVICE
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