If you have ever considered freezing your credit to thwart identity thieves, you’ll be happy to know that a new law becomes effective September 21, 2018 that will allow you to freeze and unfreeze your credit reports for free.
A credit freeze (sometimes referred to as a “security freeze”) restricts access to your credit report. So, if a crook tries to open a credit account in your name while you have a freeze in place, the financial institution will not be able to pull your credit history, and the application for credit should be declined.
Prior to the new federal law, the three major credit reporting bureaus – Equifax, Experian, and TransUnion – were allowed to charge fees for placing and lifting freezes on consumer credit reports. Some states already had laws in place mandating free security freezes for their residents, but for consumers outside of those states it could cost as much as $10 each time they requested to freeze or unfreeze their reports.
The new law also aims to make it easier and faster for consumers to freeze and unfreeze their credit. After September 21st, each credit reporting agency will be required to have a webpage consumers can visit to request free credit freezes, unfreezes, and fraud alerts. And, the credit bureaus must act on freeze requests in a timelier manner. Freezes that are filed online or over the phone must be acted upon within one business day of the bureaus receiving them, and the bureaus will have three business days to act on requests they receive via postal mail.
The changes to the law also impact fraud alerts. Unlike credit freezes, which require you to contact each individual credit bureau to initiate one, a fraud alert only requires you to contact one bureau. It’s then that bureau’s responsibility to notify the two other credit reporting agencies.
And starting on September 21st, fraud alerts will last for a full year, instead of expiring after 90 days, which is currently the case. With a fraud alert on your credit report, financial institutions should not grant credit in your name without first contacting you to obtain your consent. The change to fraud alert length will prevent consumers who initiate fraud alerts from having to reinstate them every three months.
Another change that will go into effect involves protecting minors from ID theft. Crooks often try to steal the identities of minors because the crime typically goes undetected until the child grows up and applies for credit for the first time. Currently, some states allow you to freeze a child’s credit report, while others prohibit this activity. However, when the new law becomes effective on September 21st, parents will be able to place a credit freeze on their children who are under 16 years of age, free of charge, no matter what state they live in.
While credit freezes can be a huge help in preventing a crook from opening fraudulent accounts in your name, and wreaking havoc on your credit history, it’s important to keep in mind that they can also make it more difficult for you to quickly apply for new credit cards and loans. Before you can be approved for a new credit account, you’ll need to unfreeze your credit report, which could take up to three business days.
What’s more, you’ll usually be issued a personal identification number when you initiate a freeze, and you’ll need that PIN in order to unfreeze your credit down the road. So it’s very important to keep track of that number. If you don’t, it could cause a severe delay in unfreezing your report.
For more information regarding the new law governing credit freezes, please visit https://www.consumer.ftc.gov/blog/2018/06/free-credit-freezes-are-coming-soon-0.