Another massive data breach, this time at Capital One, is likely to have a lot of us asking if there’s something we can do to protect ourselves before our information gets out — there is. While you can sign up for credit monitoring or other services, putting a credit freeze in place will make it very difficult for anyone but you to take out credit in your name. That means that even if a criminal gets enough information to open an account in your name, they’ll have trouble doing it.
As of 2018, a new law that makes it free to freeze your credit went into effect. Prior to the new law, each of the three credit bureaus could charge you to put a freeze in place (usually around $10 at each bureau). Then, you often had to pay again to unfreeze or "thaw" your credit if you wanted to do something that required a credit check, like applying for a new loan. However, after the massive Equifax data breach in 2017, consumer advocates called on Congress to provide free access to credit freezes.
WHAT DOES FREEZING MY CREDIT DO?
When you freeze your credit, the credit reporting bureaus can’t give any information to anyone who makes an inquiry about you. Typically, businesses inquire about your credit when you (or someone posing as you) attempts to, for instance, open a new credit card, buy a car or rent an apartment. The credit check helps the business determine if they want to lend or rent to you, and it can help set your rates and lending terms for loans and credit cards.
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When your credit is frozen and the business can’t get any information about you, it typically stops the process — which means a fraudster will be unable to open an account while using your identity.
WHY DOESN’T EVERYONE JUST FREEZE THEIR CREDIT THEN?
While freezing your credit won’t guarantee safety, it’s a pretty strong defense against identity theft. But, remember, you still need to unfreeze your credit if you legitimately want to apply for a loan or line of credit. While it’s not a heavy burden, it does add extra steps anytime you do something that requires a credit check.
You could opt for credit monitoring instead of a full freeze. When you pay for a credit-monitoring service, you’ll get alerts about any activity involving your credit report. This can quickly bring a potential problem to your attention — but it’s not preventative, so you won’t know if someone has used your identity until after it happens.
You can also request a free copy of your credit report annually from each of the major credit bureaus and check it for any activity you don’t recognize. If you find anything suspicious, report it immediately and take steps to lock down your credit through a fraud alert or credit freeze.
HOW DO I FREEZE MY CREDIT?
If you want to freeze your credit, you need to do it at each of the three major credit bureaus: Equifax (1-800-349-9960), TransUnion (1-888-909-8872) and Experian (1-888-397-3742). If you request a freeze, be sure to store the passwords you’ll need to thaw your credit in a safe place.
Whether or not you choose to freeze your credit, fraudsters could still take advantage of you by getting things like your credit card number(s) or passwords to online accounts. Make sure you’re taking the proper steps to secure your information so that it doesn’t fall into the wrong hands.
This article originally published in 2018. It has been updated to reflect new information.