The humongous data breach in 2017 by Equifax that exposed the sensitive personal information of nearly 146 million Americans, greatly increased the risk of identity theft and financial fraud for those affected.
Most people realize it’s a risk that can’t be easily dismissed, especially since data breaches still occur will alarming frequency. For example, Shopify recently announced that 200 of their merchant partners were affected by a similar breach in September 2020.
Frankly, if I had a nickel for every person who has ever questioned the wisdom of my decision to occasionally share multiple details of my personal finances on this blog — especially considering its eponymous title — I’d be about $3.65 richer right now.
Usually, most people warn me that my openness concerning almost all aspects of my life makes me more vulnerable to identity theft — and they’re right. After all, once an identity thief gets hold of your name, social security number, address and date of birth, they’ve essentially got the keys to your credit castle.
Still, I manage to sleep like a baby every night because I have a security freeze on my credit files at the three major credit reporting companies: TransUnion, Experian, and Equifax. By doing so, I’ve essentially made my credit impervious to attack from would-be identity thieves.
You can freeze your credit too by simply going to each of the credit reporting company websites and making an online request.
Unlike a fraud alert — which offers very little consumer protection because lenders and retailers are not legally bound by them — a credit freeze locks up your credit files so that nobody can open up a new account or get a loan in your name. And when I say “nobody,” I mean nobody — not even you.
Another bit of good news is that a credit freeze doesn’t adversely affect your credit score either.
Of course, in exchange for the security that comes with freezing your credit report, you have to be willing to put up with several drawbacks. Here are the ones that cause the most consternation:
They’re inconvenient. A frozen credit report not only makes it impossible to open up new lines of credit, or take out a loan, but you also prevent yourself from getting anything else that may require a credit check. This includes things like insurance, utility service, or even a new job. Sometimes it happens for things you’d never expect. For example, earlier this year, I had to temporarily lift my credit freeze for a couple days in order to renew a security clearance that I need for my job.
They can’t stop thieves from making charges to existing credit card accounts. Nope. An identity thief who manages to get hold of your existing credit card numbers will still be able to charge items to those cards. So keep your paper shredder.
They won’t stop pre-approved credit card offers. Unfortunately, if you’re looking to stop junk mail, a credit freeze won’t be able to help you.
In my case, none of these drawbacks outweigh the peace of mind that comes with knowing my credit can’t be hijacked by an identity thief. Not by a long shot.
Yes, on a couple of occasions it’s been mildly inconvenient, but not so much so that I’ve ever had any regrets. And with the latest data breach by Shopify, maybe it’s time you considered freezing your credit too.
Photo Credit: William Warby
I got freezes after I lost my driver’s license in Las Vegas. Except for the minor cost for a temp lift for my mortgage re-finance, the freeze hasn’t been a problem and the peace-of-mind is worth it.
I’ve considered it a few times, but decided against it. I still anticipate needing a mortgage refi at some point soon, so I didn’t feel like freezing and unfreezing. At some point though I might do it – whenever I don’t anticipate “needing” credit any more.
Len, Using “eponymous” pretty good for an engineer.
And about that security clearance, I guess they forgot to interview me, you might be staying home with the Honeybee….(she would probably shoot me!)
When you “lift” your block, do you have to talk, email each agency? How long does it take and what’s the process?
Dood, an extravagant vocabulary is one of the perks of being an engineer. Using it properly shows that one is a GOOD engineer.
Aww, thanks for that Entity. I’ll try to tell that to my boss, but he probably won’t buy it if it means he has to pay me more money. 😉
Amen! (Grandfather)
Yes, you have to lift your credit freeze with each company separately, Dr. Dean. That has its own pros and cons. The advantage is that sometimes you don’t need to always lift the freeze with all three companies — and that saves you money. For example, I recently applied for a new credit card; thankfully, they only needed me to lift my freeze with one credit reporting agency, so I only spent $10. Then again, there are other times — like for my security clearance review — where I needed to unlock all three reports.
They dont charge anymore in my state.
I just had to lift the freeze to refinance. Took about 60 seconds per agency. Plus, you can lift it for however long you want to. I obviously think the pros outweigh the cons.
Len, This sounds like good advice. Along with Dr Dean’s questions I have one. If you freeze your credit report will your credit rate rise or fall when we pay our obligations?
Your credit freeze has no effect on your credit score. Creditors continue to send reports — both good and bad — to all three reporting agencies and they are used to update your credit score. If you pay your obligations on time, I would expect your score to increase over time, just as it would if you didn’t have a freeze.
Hey Len, I was victim of fraud a few years ago so I got a free freeze. It definitely helps me sleep better at night.
But you’re right it is a pain to have to call in and get the freeze lifted when you want a new loan….especially if you don’t know which of the three agencies the lender will be using (and sometimes they have a hard time telling you). All in all it’s worth the extra hassle though.
You can also lift your freeze online. You can use a pin number the reporting agencies give you and do it without the need to make a phone call.
These days, there is simply no alternative to blocking miscreants out of your credit capabilities, by whatever means are available, IMO.
Credit freezes at all three credit reporting agencies are those means.
That they are, Dave!
Hi Len,
I froze my credit with the main 3 but an article in our local paper said we should freeze with Innovis as well. Id never heard of that one but I did it. They did not charge a fee.
Interesting. I never heard of Innovis either, but I went to their website and froze mine there too. Thanks for the tip, Jack!
I froze mine there, also. Thanks for the tip!
Unlike the major three, Innovis doesn’t make you jump through unnecessary hoops to get it done, as though you might be a miscreant not entitled to the service. (Why would miscreants want to freeze an account? wouldn’t they logically want to access it?)
My wife had her identity stolen 10 years ago and we put a freeze on her credit with all 3 agencies. At the time, it was a major pain. Nothing could be done online or on the phone. Everything had to be done in writing with copies of your ID. Removing the freeze was likewise difficult. Nowdays it seems much easier.
However, one thing I’d like to point out is that a freeze can affect you in ways you might not expect. We tried to sign my wife up for online access to her Social Security statements. There were verification checks that pulled information from her credit history. She answered them all correctly, but she kept getting denied. We finally put two and two together and figured out that with the freeze in place, the verification system couldn’t check her credit report to verify her answers.
Thanks for the personal anecdotes, Shaun. There is no doubt that having your credit frozen comes with the occassional headache, but as you say … the Internet makes it relatively painless now.
The same happened to me this year. The worst days of my life!
i was able to put a freeze on my credit swiftly with the help of the “computer surgeon”, 2 years ago when i had a credit theft issues, i just unfroze my credit few months ago, but he helped improve my credit score so i can apply for a mortgage loan, now i am OK with my credit score.
Credit freezes are now free per federal law.
https://www.consumer.ftc.gov/blog/2018/09/free-credit-freezes-are-here
Thanks for pointing that out, Dave! The article has been updated to reflect the 2018 law that made all credit freezes free.
Perfect timing on this post! I was debating on removing my frozen credit reports. You made me realize that its better to keep them. Thanks Len.
Earlier this year, I received a letter from my state’s unemployment office that my unemployment benefits were approved after my layoff. Trouble was, I was still employed. Seems that I was hit by a scam claim. After clearing it up with the agency and the state’s attorney general’s office, I immediately went and froze my credit. I feel a lot more at ease now. Family and friends were hit as well, but they could not be convinced to freeze. I hope it all goes well for them. Although I will need to purchase a newer driver soon (23 year old Toyota with 345,500 miles is starting to slow down a bit), so I will have to see how much trouble it is to unfreeze. Should be a snap.
David, I had to unfreeze my report not too long ago and it was easier than it has ever been. The three agencies have really done a great job of streamlining the process.
Fortunately, I froze our credit over 15 years ago, when we paid off the house. Closed all our accounts. Wife and I decided to live the old style, save the money and pay cash for things. I know there are benefits of some credit cards , but there is no benefit greater than the peace of mind that I don’t owe anyone anything, I don’t pay banks, they pay me.
I would suggest this lifestyle for anybody who can pay off their home. The only thing that is inconvenient is that we keep our cars until they die, and if needed, just replace the engine, its a lot cheaper.