Identity theft is splashed all over the news and is on most peoples’ minds. Consumers are afraid to click links in emails, use their credit cards for online purchases and even answer their phones. What is a cautious citizen to do? Today, we’ll dive into two terrific strategies to keep your credit safe and explore the pros and cons of each.
The most popular approach is to “freeze” your credit. One reaches out to each of the three credit bureaus (Equifax, Experian and Transunion) and requests that their credit profile be frozen. This can be done online at each bureau website, by phone or by mail. If done online or by phone, the bureau has one business day to process the request or three business days if done by mail. As part of the freeze, clients can use their credit cards and their credit score will not be affected. Nobody, though, can reach out and apply for any type of credit using your personal information as access is blocked. In the normal course of applying for a credit card or loan, a creditor will send a request to one or more bureaus to see your credit data. This examination of your credit records allows the creditor to make a decision on whether or not to grant you credit. When your account is frozen, creditors can’t access the data and therefore will not make a credit decision to issue new credit in the form of a card or a loan. Credit freezes are free to consumers as mandated by federal law. If you need to actually apply for credit, you will need to temporarily “unfreeze” your credit. You will need the PIN (personal identification number) assigned to you from each bureau at the time of the original freeze and you will need to contact all three agencies either online, by phone or by mail. Phone numbers for the three bureaus are as follows:
Equifax – 800-349-9960
Experian – 888-397-3742
Transunion – 888-909-8872
When a customer either goes online or calls with the unfreeze request, each bureau, by law, has one hour to grant the request. A mailed request must be processed in within three business days.
Even when your credit profile is frozen, certain parties have access to your credit reports according to usnews.com. You can still access your own credit score and free annual credit report as always, but other parties will be able to see it as well. These include current creditors, debt collectors, marketers for the purpose of sending you credit card offerings and cellphone and utility companies. Also to note is that governmental agencies can also access your credit for reasons of tax matters and child support.
Credit locks also protect your credit information, but do it a bit differently. Instead of being mandated by law as are credit freezes, credit locks are offered on a voluntary basis as a product of the three credit bureaus. As such, those companies are allowed to charge a fee for their service. At the end of the day, the result is the same: both credit locks and credit freezes cut off access to new credit requests. If you’re looking for convenience, a credit lock may be the best answer, even if you have to pay a fee. When you pay for a credit lock with each bureau, you can download an app on your smartphone instead of being entrusted with a PIN. If you decide you need to temporarily unlock your credit so you can request legitimate credit, you merely tap your app and, with a simple swipe, can immediately unlock your credit.
With a credit freeze, if you lose your PIN, it could take a great deal of time and paperwork to get the account unfrozen.
As stated at the beginning of this article, both credit freezes and credit locks are great solutions to the problem of stopping financial predators from opening credit in your name. But please remember that neither strategy can fully protect you against identity theft. If someone steals your credit card or debit card, they will be able to make unauthorized purchases. Be diligent, then, in scouring your bank statements and credit card statements for charges that are questionable. If someone steals your social security number and your credit is frozen or locked, they can’t apply for new credit, but they could file a false tax return or a phony medical claim. Both credit freezes and credit locks are handy tools of protection to have in your back pocket but, to fully protect yourself , attention to the details of your financial accounts rests with you.
Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Huiskamp Collins Investments, LLC and JWC/JWCA are unaffiliated entities.