As of September 21, 2018, federal law permits all consumers to place a “credit freeze” on their profiles with the national credit bureaus: Experian, Equifax, Innovis, and Trans Union. Until then, this security feature was only available on a state-by-state basis. If you lived in Michigan you were able to use this freeze feature, but if you lived in another state this might not have been available. But this important security and privacy tool is now available to all consumers on a nationwide basis under the federal Fair Credit Reporting Act (“FCRA”).
What is a Security Freeze?
A security freeze provides consumers the ability limit access to their credit report unless the consumer specifically authorizes the access using a PIN number that only the consumer has access to. In this way, the consumer “locks up” or “freezes” their credit report, and only the consumer has the keys. This case-by-by case access places consumers in control of who accesses their credit report and when. Because creditors will generally need to review a consumer’s credit report before opening a new account, limiting access to the report will help prevent identity theft. By limiting access to their credit reports, consumer can keep identity thieves from opening new credit accounts that would require a credit review.
The security freeze will also prevent a consumer from accessing their own credit profile without the PIN. This added security layer prevents an identity thief from requesting a consumer’s credit report and using that report to gain access to identification and financial information that would allow multiple attacks on the consumer’s identity. Together with other tools to limit businesses’ access to the consumer’s credit profile consumers now have several tools to fight back against identity theft.
Does a Security Freeze Prevent All Access to a Consumer’s Credit?
No. New creditors and the consumer will need to be granted access through the use of personal identification number (“PIN”) issued by the credit bureaus. But the FCRA will allow a number of different uses of the consumer’s credit report without the need to have the consumer “unlock” the report with the PIN. These permissible uses include:
- Creditors who already have an established account with the consumers will continue to have access to the consumer’s credit to evaluate the consumer’s continued eligibility for the credit. This occurs most often with credit card accounts where the creditor has the right to change the account terms like the amount of credit or rate of interest.
- Creditors who wish to use the consumer’s report for pre-screen offers of credit. But consumers can completely opt out of these prescreened credit offers by writing to the credit bureaus.
- Employers who want to use the consumer’s credit report to screen for employment purposes can still access reports. But under established law, employers must obtain the consumer’s consent and provide a notice of rights before using the report.
- Landlords who want to use consumer reports to screen tenants may still access a consumer report.
- Insurance companies may still access consumer reports to evaluate the consumer for eligibility for a policy and firm offers of insurance. Consumers can, however, opt out of these prescreened offers.
How Do I Place a Security Freeze?
Consumers can place security freezes on their credit report for free by simply requesting the freeze in writing using our free letter. After receiving the request, the credit reporting agency will contact the consumer and issue PIN number that will allow the consumer to “unfreeze” the report so that potential creditors can issue credit. After that point, the consumer will need to be available at the consumer’s designated phone number to authorize access any time a request for a consumer report is requested.
Consumers can also request a security freeze by phone or online. But the credit bureaus have placed several practical and legal barriers in the way of consumers who wish to use anything other than a written request. As such, consumer advocates recommend only requesting these freezes in writing and sent by certified mail with a return receipt requested.
Will a Security Freeze Cause My Current Creditors to Close My Accounts?
Current creditors of the consumer will continue to have access to the consumer’s report and should not be affected in any way by the security freeze. More importantly, security freezes are provided for in the federal Consumer Credit Protection Act and federal law protects consumers from retaliation by creditors against any assertion of the consumer’s rights. Specifically, the Equal Credit Opportunity Act absolutely prohibits any creditors from discriminating against a person who exercises their rights under the Fair Credit Reporting Act, which means that if a consumer exercised their right to a freeze, creditors cannot discriminate them by closing their account.
How Much Does a Credit Freeze Cost?
Unlike the “credit lock” products that were previously offered by the credit reporting agencies, “credit freezes” are absolutely free for all consumers, irrespective of which state they live in.
Can I Freeze My Minor Child’s Report?
Yes. This is a great new feature of the FCRA. Adults can place a security freeze on the report of their minor child. Placing a credit freeze on the profile of a minor child will help prevent identity theft by former spouses, babysitters, estranged relatives, and clerical staff of service providers who have access to the child’s private information. Identity theft of minor children can prevent them from getting student loans, their first job, or a home, so we recommend that every adult take out that security freeze for their minor child.
Do I Have To Be An Identity Theft Victim To Freeze My Credit Report?
No. Unlike some other security features of the FCRA, the new security freeze does not require any dispute of an account or identity theft in order to place the freeze. Anybody can access a security freeze and ask the credit reporting agencies to freeze their reports and give them a PIN number.
Will This Keep Me From Being An Identity Theft Victim?
Not necessarily, but it will greatly reduce your exposure. Identity thieves will still be able to open accounts with creditors who do not use credit reports. Those accounts may wind up in the hands of debt collectors who do report to the credit bureaus. But nearly all creditors will access reports before opening an account, so this is a very limited risk. Additionally, identity thieves can use partial identifiers that don’t cause creditors to access to your credit report which is protected by a freeze. This would result in the opening of an account that may not be linked to your credit profile initially. But, once the fraudulent account goes into default, creditors and debt collector may search for the true account holder and find an unrelated consumer. This can result in new credit reporting of an identity theft account that was not initially associated with the consumer.
Even if security freezes are not a perfect solution, they provide a greatly reduced risk for fraud. This new feature will severely hamper an identity thief’s ability to steal your identity and ruin your credit. This remaining possibility of identity theft should not deter you if you already think that a security freeze is right for you.
Is there any downside to placing a security freeze?
Security freezes are intended to slow down the credit approval process to keep identity thieves from ruining your credit before you are aware of it. As such, if you want or need credit “on the fly,” you may have a difficult time getting it quickly. This happens most often when a consumer wants to open a new credit account at the cash register of a retailer that is offering discounts to consumers who open new accounts. Also, consumers need to be available on their designated contact line with the credit bureaus to give their PIN number when needed. If the consumer is not available, the creditor may give up on the consumer’s credit application. So consumers who cannot answer the phone when contacted may have trouble with new credit applications.
Leaving aside the question of whether a new account is a “good” idea, consumers who carefully plan credit use will feel little inconvenience. Those who open new accounts frequently may find that a credit freeze creates an unnecessary hassle and may be willing to suffer the risks of identity theft rather than lose out on discounts.
Need More Help?
If you need more information or help with a security freeze or identity theft, call Lyngklip & Assocates at (248) 208-8864 for a free consultation.
- Security Freeze Request
- Minor Child Security Freeze Request
- Letter to Pot Out of Prescreened Credit Offers
Related Pages on Our Web Site
- Credit Reporting Errors & Identity Theft
- Credit report “Security Freezes” and how they work.
- Can I sue a bank or finance company for ruining my credit report?
- Credit Report Disputes Part 1
- Credit Report Disputes Part 2
- Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.
- Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq.