Credit card fraud is the most common type of identity theft. And while a credit freeze is one preventative measure you can take, it may not always be necessary. What is a credit freeze and what does it do? Read on.
A credit freeze simply restricts access to your credit report. Since anyone giving you a loan (either via a new credit card or a mortgage) will want to check your credit history and score, this effectively blocks someone from opening new lines of credit under your name.
To freeze your credit, send separate requests to each of the three major U.S. credit bureaus—Experian, Equifax and Transunion—online or by mail or phone. They will then freeze your credit reports and give you a personal identification number (PIN). Existing creditors will still have access to your credit reports, but new creditors cannot view them unless you contact the credit bureau and use the PIN to either permanently or temporarily unfreeze them.
Freezing your credit does not lower your credit score, but it does make applying for a new loan or credit line more challenging, so here are few things to in mind:
A Freeze Isn’t Complete Protection. It may not stop identity thieves—yes, it will prevent a thief from opening new accounts under your name, but it won’t prevent fraud on current accounts. If your existing credit card information gets stolen, the thief can still run up a bunch of charges. A credit freeze is not a substitute for regularly monitoring your credit card activity.
Act Fast. If you suspect you’ve been a victim of a widespread data breach or if you notice fraudulent or suspicious activity on your account, consider freezing your credit before the problem snowballs.
Protect That PIN. If you do freeze your credit, hang on to your PIN! A lost PIN increases the hassle factor significantly if you need to thaw your credit for a new loan.
Alternatives to a Freeze. Many incidences of theft are minor and can be handled without freezing your credit—a credit lock or a fraud alert are other less-involved solutions.
A credit lock still prevents creditors from gaining access to your credit report, but it is less onerous to unlock your credit than it is to unfreeze it. But locking your credit is not necessarily free and it is not government-regulated.
Putting a fraud alert on your credit report will alert creditors to take additional steps to verify your identity before approving anything. Among its benefits, a fraud alert doesn’t require you to remember a PIN or take additional steps to lift it—they expire after 90 days and can be renewed.
Preventative Measures. Monitor your credit card activity and stay wary of suspicious phishing emails that ask for key pieces of information regarding your card information. We also recommend requesting your free credit report once a year from each of the three major credit bureaus so that you are aware of any irregular activity.
If you have any questions about credit card fraud and/or Social Security scams, please contact us at (800) 492-6868 to see how we can help!