Essential Steps to Secure Your Identity: Credit Freeze Explained

Online Safety
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It seems that scams are always on an upward trend. One small but effective way to protect yourself is with a credit freeze, which is something I'm recommending to most people, especially if you are high profile or have been involved in a data breach that exposed social security numbers. Which let's be honest, is probably about every American. Here are some of the biggest data breaches that exposed social security numbers. The US has 258 million adults according to the 2020 census.

  • Experian, 2013 - 200 million customers

  • Equifax, 2017 - 148 million

  • Capital One, 2013 - 106 million

  • Anthem, 2015 - 79 million

  • Office of Personnel Management, 2015 - 22 million (this number seems low by comparison but I'm including it because many of my customers are or have been federal employees since I work in the DC area.)

Yes, I realize the irony of signing up for an account with Experian and Equifax considering that they are the two largest offenders on this list. But you already have a file with them anyway, so this is simply giving yourself more control over the data they already have.

What is a Credit Freeze?

A credit freeze is a very effective way of preventing a specific kind of fraud. It means that no one can open a line of credit in your name, a very common form of identity theft. When you do need to apply for credit you will need to visit all three credit bureau websites to temporarily lift the freeze. But considering how many of us have our social security numbers and other personal information on the dark web this little inconvenience is nothing compared to dealing with identity theft.

As you may know, there are three major credit bureaus. Any time you apply for a new line of credit, at least one of these companies is likely to be consulted. Placing a credit freeze blocks any "hard inquiry" of your credit, preventing anyone from opening a new account in your name.

  • Hard inquiry: These are what credit freezes prevent and what is used when you apply for a new line of credit.

  • Soft inquiry: credit freezes do not affect these. This is when you check your own credit, when a bank wants to pre-approve a loan, or an existing lender wants to see if they should restrict or extend you more credit. Despite what you my have heard, soft inquiries do not affect your credit score at all; you can check your own credit every day if you want.

What do I need to be aware of?

There are of course several things you need to be aware of before you do this.

  • Any time you need to apply for a new line of credit you will need to temporarily "lift" the freeze or "unfreeze" your credit. It's not difficult but it's something you have to remember to do or your application will be denied and you'll need to resubmit. The lender will not see "bad" credit, they will simply get an error message. They may or may not know the reason so you'll need to remember that an error would be cause by a freeze.

  • All bureaus use SMS 2FA. This means that if you sign in on a computer they don't recognize you will get a text message with a code to verify that you are you. The biggest problem with this is that if you ever change your phone number and forget to update this in your account it could be difficult to get back in.

  • Do NOT lose the passwords. If you aren't good with your password manager (I usually recommend iCloud Keychain or 1Password) you should absolutely write your passwords down and store them wherever you keep your birth certificate. Resetting your passwords is not usually as simple a process as it is with most other websites.

  • Credit freezes have been legally mandated to be free in the US since 2018. Sometimes when you sign in they try to upsell you to a paid credit monitoring service, but they always provide a button for "later" or "keep my current plan" or something like that.

Download my Credit Freeze Lifting Cheat Sheet

To make the process of unfreezing your credit simpler I have created a Credit Freeze Lifting Cheat Sheet. Print it out, hand write your personal information as you set up your freezes, then keep it in a secure place like with your birth certificate.

How do I freeze my credit?

Unfortunately, this is not a one-stop process. You will have to repeat this with each credit bureau. And the process at each bureau is slightly different.

Essentially, you visit each of the following websites and follow the prompts for a credit freeze. You will be asked to create a password (please please do not make this a standard password or variation of a password you use elsewhere because those passwords are probably on the dark web as well), you will be asked to verify your phone number, and you may be asked some finance questions to verify your identity.

How and why do I unfreeze my credit?

Any time you fill out an application that requires a credit check (a new credit card, loan, lease, or utility service) you will need to temporarily lift your credit freeze at all three beaureaus. You do not need to do this if you are checking your own credit in what's known as a "soft inquiry". You only need to unfreeze when getting a new account.

For each of the three credit beureas, follow those same links as above and sign in. Look for the page that says something about "Lift credit freeze" or "unfreeze" or "thaw" or something along those lines. If you use my cheat sheet printout above, very specific instructions are included but they could change if the websites are updated. Each website will ask you for a date range for the unfreeze. If you choose today as your starting day, your credit will be unfrozen within an hour (that's the legal requirement but in my experience it's actually within seconds). Your credit will re-freeze at the end of the last day.

What about a Fraud Alert?

When signed into your credit bureau account, you may see an option for a Fraud Alert. This is a softer approach. It doesn't block you from applying for credit. Instead, it flags your credit file so that if you do apply for credit, the lender is alerted that they must take additional steps to verify your identity. If you are worried that you're going to screw up the credit freeze and not get back into your account, or if you're only slightly concerned this could be a good alternative. It's not as thorough as a freeze but it's a better than nothing. Freezes must be done for each credit bureau, but a Fraud Alert only has to be enabled on one bureau and they share that information with the others. Additionally, Fraud Alerts have to be renewed after one year (or 7 years with a theft report from law enforcement).

Additional links

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