BBB Tip of the Week: New law makes credit freezes, thaws easier and free
Identity theft can happen to anyone, but consumers have a new free tool to help protect themselves against scammers who would steal their financial information. The three nationwide credit reporting agencies in the U.S. (Experian, Equifax and TransUnion) will be required by a new federal law to allow consumers to “freeze” and “thaw” their credit report for free.
The Economic Growth, Regulatory Relief, and Consumer Protection Act went into effect Friday. It does many things, but the one most consequential to most consumers is that it changes the rules regarding credit freezes.
Prior to the law, freezing your credit was governed by each state’s laws. Some states prohibit the credit reporting agencies from charging fees, but other states allow fees. Credit freezes also must be placed and lifted at each agency individually, and the process can be cumbersome and time-consuming. The number of situations requiring a credit check – upgrading your cell phone, applying for a job, signing a new lease, etc. – make freezing and unfreezing your credit inefficient. As a result, many people won’t bother with a freeze unless they believe they are specifically at risk for identity theft.
With the new law, freezing and unfreezing your credit will be simpler and free.
You will still have to take action with each of the three credit bureaus, but they will have online portals that make the process much simpler. When a credit reporting agency receives an online or phone request to freeze someone’s credit, they must have it frozen within one day. Requests to unfreeze someone’s credit report must be completed within one hour. This makes it much easier to keep your credit frozen and then only unfreeze when you need to apply for new credit as the changes are free and can be done quickly and easily online.
A security freeze prevents the credit reporting agency from releasing your credit report while it’s in effect. Consumers are given a PIN or password they must have in order to later thaw their credit report so it can be released again.
The law also allows any parent to freeze their child’s credit. A child’s credit report is especially valuable, since it is clean and often not monitored regularly.
Finally, the new law extends initial fraud alerts on your credit report from 90 days to one year and allows victims of identity theft to place a fraud alert on their credit reports for seven years. Over the next year, the credit reporting agencies are also required to provide free credit-monitoring services to all active duty military personnel.
For more information:
To learn more about how to protect yourself from identity theft, you can visit BBB’s scam tip page on identity theft. And to learn about federal resources for protecting yourself and recovering from identity theft, visit identitytheft.gov.
For more on each agency’s freezing processes, use the links below:
Experian - experian.com/freeze
Equifax - freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp
TransUnion - freeze.transunion.com/sf/securityFreeze/landingPage.jsp