Nicole Sennett Discusses Why You Should Freeze Your Credit in 2024

Identity theft is on the rise this year. Over 550,000 cases of identity theft were reported during the first half of 2024, with credit card fraud being the most common type.

Credit card fraud occurs when identity thieves steal your personal information to open credit card accounts in your name. It can have devastating consequences, from damaging your credit score to rendering you ineligible for loans, credit cards, and other financial opportunities. While you can report the fraud and eventually restore your credit, the process is often time-consuming, complex, and emotionally draining.

The good news? You can proactively prevent this type of fraud by freezing your credit. Read on to discover what credit freezes are, how they work, and how you can implement them with each credit bureau.

What is a Credit Freeze?

A credit freeze is a free service offered by the three major credit bureaus – Experian, Equifax, and TransUnion – temporarily blocking lenders from accessing your credit reports. Credit bureaus won’t release your credit files to new creditors while frozen, preventing fraudulent applications from going through.

While credit freezes keep new creditors out of your credit files, they won’t restrict the following parties’ access:

• You – You can still check your credit reports, use your existing credit accounts, and request credit limit increases while your credit is frozen.
• Existing creditors – Your current creditors can also check your credit as needed.
• Debt collectors – Collection agencies that buy your unpaid debt from creditors can check your credit reports to obtain your contact information.
• Marketers – Credit companies can run soft pulls of your credit reports to send you pre-screened credit offers.
• Government agencies – Government agencies can access your credit reports during law enforcement investigations or to enforce child support obligations.
• Landlords and employers—With your permission, landlords and employers can access your credit reports to conduct background checks on prospective tenants or hires.
• Insurers – Insurance companies can check your credit during their underwriting and rating processes.

How to Freeze Your Credit

Freezing your credit is an effective way to reduce your risk of credit card fraud. Despite this, only 10% of consumers currently freeze their credit. Many people only explore their fraud prevention options after it’s too late.

Rather than taking this reactive approach, you can protect yourself by freezing your credit with each credit bureau. Requesting a credit freeze typically takes less than 30 minutes. You can complete the process online, over the phone, or by mail.

Just follow these steps:

1. Contact each credit bureau

You must freeze your credit reports with each credit bureau individually. If you do so online, you’ll need to create an account with each credit bureau first.

Here is the credit freeze contact information for each of the credit bureaus:

• Experian:
  • Online: https://www.experian.com/help/credit-freeze/
  • Phone: 1-888-397-3742
  • Mail: Experian Security Freeze
    P.O. Box 9554
    Allen, TX 75013
• Equifax:
  • Online: https://www.equifax.com/personal/credit-report-services/credit-freeze/
  • Phone: 1-888-298-0045
  • Mail: Equifax Information Services LLC
    P.O. Box 105788
    Atlanta, GA 30348-5788
• TransUnion:
  • Online: https://www.transunion.com/credit-freeze
  • Phone: 1-800-916-8800
  • Mail: TransUnion
    P.O. Box 160
    Woodlyn, PA 19094

2. Submit the required documentation

No matter which method you choose, you’ll need to provide information to verify your identity, including your government-issued ID or social security card, pay stubs or tax forms, and utility bills or lease agreements.

3. Set your PIN or password

Some credit bureaus may ask you to create a PIN or password so you can freeze and unfreeze your credit faster in the future. Make sure you choose a code you can remember or write it somewhere safe.

4. Confirm your request

Once you’ve provided the required information, you can confirm the details and submit your credit freeze request. If you apply online or by phone, the credit bureaus have one business day to complete the freeze, though they often process your request much faster. If you apply by mail, the credit bureaus must freeze your credit report within three business days.

How to Lift a Credit Freeze

While credit freezes block fraudulent credit applications, they also prohibit you from applying for a new loan or credit card while they’re in place. Thus, you need to lift your credit freezes before applying for financing.

Here’s how you can “thaw” your credit freeze:

• Contact each of the credit bureaus – To lift the freeze, you’ll need to contact each of the credit bureaus online, over the phone, or by mail. If you do so online, you can often lift the freeze by logging in online using your PIN or password. If you complete the process over the phone or by mail, you’ll need to provide information to verify your identity.
• Request a temporary thaw or permanent lift – You can lift your credit freeze temporarily or permanently. A temporary thaw will pause your credit freeze for a set period, enabling you to complete your credit card or loan application, whereas a permanent lift will unfreeze your credit reports indefinitely.
• Wait for the lift to take effect – By law, the credit bureaus must lift online or phone credit freeze requests within one hour. If you mail your request, the process can take up to three business days.

Once you’ve completed your loan or credit card application, you can re-freeze your credit reports by phone or online in a few clicks. If you requested a temporary thaw, there’s no need to take further action—the credit bureaus will automatically re-freeze your reports when the thaw period ends.

The Pros and Cons of Credit Freezes

Freezing your credit has many benefits, including:

• Credit fraud protection: Freezing your credit is a quick and cost-effective way to keep fraudsters from opening new credit accounts in your name.
• Credit score preservation – Preventing unauthorized access to your credit reports can protect your credit score from fraudulent credit activity.
• Affordability – Thanks to the FTC’s 2018 ruling, credit freezes are available at no cost to consumers.
• Peace of mind – With credit freezes in place, you can enjoy the peace of mind that you’re much less likely to fall victim to credit card fraud.
• Financial restraint – While credit freezes are designed to prevent fraud, they can also stop you from impulsively signing up for Buy Now, Pay Later (BNPL) offers and store credit cards.

The only downside to credit freezes is that they can increase the time involved in completing new credit applications.

However, it’s important to note that credit freezes don’t stop all types of identity theft or financial fraud. To protect yourself against other forms of fraud, you should monitor your bank statements regularly, use strong passwords, enable two-factor authentication, and be cautious about sharing personal information online.

How to Protect Vulnerable Loved Ones’ Credit

Along with freezing your credit reports, you may be interested in freezing your minor child or aging parents’ credit reports. Both of these groups are popular targets for identity theft. Just take a look at these statistics:

• Children are 51 times more likely to fall victim to identity theft than their parents.
• Identity theft affects 1.25 million children each year.
• One in 10 seniors falls victim to identity theft each year.
• People over 60 experience the most significant financial losses from identity theft compared to any other age group.

Children are prime targets for identity theft because their credit reports are often blank slates. As a result, their parents may assume no monitoring is necessary, leaving their files open to fraudulent infiltration.

Seniors, on the other hand, often lose the ability to manage their finances and monitor their credit independently. If they forget to pay bills, miss credit monitoring notifications, or overlook signs of suspicious credit activity, their poor credit management and potential identity theft can go unnoticed for long periods.

You can safeguard your loved ones’ credit reports the same way you protect your own by regularly reviewing them and freezing them when not in use.

How to Freeze Your Child’s Credit Reports

The process for freezing your child’s credit reports is similar to freezing your own. The steps include:

• Checking if your child has a credit report – If your child is an authorized user on your accounts or a past victim of identity theft, they may already have credit reports with each credit bureau. If not, you’ll need to establish their credit reports before you can freeze their credit. Visit Experian’s Child Identity Theft Protection Center to learn more about this process.
• Verifying your eligibility – If your child is under the age of 16, you have the legal authority to freeze their credit reports. You must prove your legal guardianship using a birth certificate or legal guardianship papers. If your child is over 16, they will need to freeze their credit reports themselves.
• Submitting the required documents – After proving your eligibility, you must provide your child’s personal information, including their full name, address, date of birth, and Social Security number, and submit a copy of your government-issued ID to verify your identity as their parent or guardian.

Once your child’s credit is frozen, it will stay that way until you or they unfreeze it in the future, preserving their credit reports’ security and accuracy.

How to Freeze Your Aging Parent’s Credit Reports

Unlike with your children, you’re not automatically eligible to freeze your aging parents’ credit airports. You can only freeze their credit if you’re their legal guardian, power of attorney (POA), or have another legal relationship that grants you authority over their finances. If you’re acting as their caregiver but don’t have legal authority, you may need to consult an attorney to obtain a POA.

Once you’ve established legal eligibility, you can gather your parent’s information (full name, address, date of birth, and Social Security number), proof of your relationship, and your government-issued ID and complete the standard credit freezing process.

Credit Freezes vs. Credit Locks

Like credit freezes, credit locks restrict access to your credit reports. The difference is that credit locks allow you to freeze and unfreeze your credit reports instantaneously within the credit bureaus’ websites or apps. The cost of these services is as follows:

• Experian: $24.99 per month
• TransUnion: $29.95 per month
• Equifax: Free

Credit locks’ speed and convenience may justify the cost for some consumers, but similar protection from credit freezes is available for free.

Credit Freezes vs. Fraud Alerts

If you suspect your personal information, such as your Social Security number, credit card number, or other identifying details, has been compromised, you can place a fraud alert on your credit reports with each credit bureau.

Fraud alerts notify potential creditors that you may be a victim of fraud and encourage them to verify your identity before approving new credit. While they don’t block new credit applications, they warn creditors to be cautious.

Standard fraud alerts last for one year. If you can prove that you’re an identity theft victim, you can set up an extended fraud alert that stays in place for seven years. Active duty military members can also employ active duty military alerts while deployed. These renewable fraud alerts remain in place for one year at a time.

Credit Freezes vs. Credit Monitoring

Credit monitoring services alert you when there are changes to your credit report, from new hard inquiries to significant changes in credit activity. While you may need to pay for these services, several credit card companies offer free credit monitoring to their cardholders.

Protect Your Credit and Retirement With Nicole Sennett

In summary, freezing your credit is an effective way to protect yourself from fraud and identity theft. Even with a credit freeze in place, it’s essential to continue monitoring your credit reports regularly and enact fraud alerts as appropriate.

If you want to protect your financial future as you transition to retirement, Nicole Sennett can help. As a seasoned Chartered Retirement Planning Counselor (CRPC), Nicole helps her clients:

• Safeguard their credit
• Employ effective debt management strategies
• Manage their investments with the support of a diligent investment committee
• Optimize their tax strategies
• Craft comprehensive estate plans to preserve their legacies
• Set up efficient wealth transfer strategies for their families’ future generations
• Stay up to date on their financial performance

Ready to empower your financial future? Schedule your consultation with Nicole Sennett today.

Sources:

Motley Fool. Identity Theft and Credit Card Fraud Statistics for 2024.
https://www.fool.com/money/research/identity-theft-credit-card-fraud-statistics/

Lending Tree. Just 17% Have Frozen Their Credit Reports and/or Set Up Fraud Alerts.
https://www.lendingtree.com/debt-consolidation/fraud-alert-credit-freeze-study/#:~:text=Key%20findings,alert%20and%202%25%20have%20both.

Nerd Wallet. How to Freeze and Unfreeze Your Credit with All 3 Bureaus.
https://www.nerdwallet.com/article/finance/how-to-freeze-credit

USA.gov. How to place or lift a security freeze on your credit report.
https://www.usa.gov/credit-freeze#:~:text=How%20long%20do%20freeze%20requests,report%20within%20three%20business%20days

FTC. Free credit freezes are here.
https://consumer.ftc.gov/consumer-alerts/2018/09/free-credit-freezes-are-here#:~:text=Starting%20September%2021%2C%202018%2C%20you,children%20who%20are%20under%2016.

Forbes. The Unknown Danger Of Child Identity Theft.
https://www.forbes.com/sites/steveweisman/2024/09/13/the-unknown-danger-of-child-identity-theft/

The Bump. 1 in 50 Kids Will Have Their Identity Stolen: Here’s What You Might Not Know.
https://www.thebump.com/news/identity-theft-children

SeniorLiving.org. Senior Identity Theft Statistics.
https://www.seniorliving.org/identity-theft-protection/statistics/#:~:text=Identity%20Theft%20Statistics%20by%20Age,identity%20theft%20among%20older%20adults.

Experian. Child Identity Theft Protection.
https://www.experian.com/help/minor-request.html