Freezing Your Credit Can be a Good Financial Security Strategy

September 11, 2017

In today’s cyber-everything world, having your financial identity compromised or stolen can be one of the most frightening and troublesome experiences you’ll have in your lifetime.  Although with some prudence, the likelihood of financial ruin is low, as anyone who has lived through it will tell you, even having someone get access to one of your credit card numbers can be a hassle that seems to never end.  With recent cyber-hacks to retailers and financial institution consumer databases, the risk of your highly-sensitive information being compromised (such as your birthdate and Social Security number) only seems to loom larger.

While credit card companies and banks can limit the damage to having your debit or credit cards stolen (as long as you quickly report the theft), protecting yourself from thieves who gain access to your Social Security number, address and birthdate could be much more complicated.  One preventative strategy is to have your credit reports “frozen”, thereby preventing anyone from opening new credit accounts under your name without your knowledge. Many people wouldn’t realize such accounts are opened under their name until they check their credit report or if they actually applied for a new account and found out their credit rating is compromised.

A credit freeze is accomplished by contacting each of the three credit reporting companies; Equifax, Experian and TransUnion, to request a credit freeze. Based on RI State law, there may be a small fee ($10) to add, lift or remove a credit freeze with any of the credit agencies.  Seniors and those who have already been victimized by identity theft generally are not charged for these services though. A security freeze remains on your credit file until you remove it or choose to lift it temporarily when applying for credit or credit-dependent services.

On Friday, September 8th, Equifax disclosed a massive cyber-hack of their database, potentially compromising the sensitive financial information of 143 million Americans.  Equifax has provided a link for you to check if your information may have been affected and will also provide one year of free credit monitoring/emergency notification for such consumers.  We recommend everyone go this link to check their own status, utilize the free monitoring offer if they are affected, and consider “freezing” their credit as a further security measure.

To freeze your report, you will need to provide each agency with your name, address, date of birth, Social Security number and other personal information.  Once the freeze is in effect, each agency will give you a Personal Identification Number (PIN) which will need to be kept secret and secured by you.  If you even need to lift or suspend the credit freeze (again with each of the agencies), you’ll need these PIN’s to unlock your report (such as when you do legitimately apply for credit or open a credit account, apply for a mortgage, etc.).  In addition, you’ll need to provide each agency with a dedicated phone number for them to contact you for verification when an inquiry is made about your credit.  Some additional tips:

1) Although a credit freeze helps prevent new accounts from being opened, it cannot prevent thieves from stealing using existing accounts.  So it pays to continue to monitor your credit report and current credit accounts for fraudulent transactions.

2) The credit freeze does not prevent current creditors from accessing your credit reports.  It also does not prevent you from accessing your own credit at any time.

3) Credit freezes are individual, so if you freeze your accounts, your spouse must also freeze theirs.

4) A credit freeze does not impact or hurt your credit score.

For more information, go to the websites of any of three credit reporting agencies above for more information and assistance.