MoneyWise Live


Credit Freezing Guidelines

August 16, 2018

It’s been a long hot summer in most places…and no one is freezing.  However freezing is our opening topic today but unfortunately….it has nothing to do with ice cream.  In our never ending battle against scammers, charlatans, crooks and thieves, why and how to freeze your credit.

Definition - A credit freeze allows you to seal your credit reports and use a personal identification number (PIN) that only you know and can use to temporarily "thaw" your credit when legitimate applications for credit and services need to be processed. The added layer of security means that thieves can't establish new credit in your name even if they are able to obtain your personal information.  Freezing your credit files has no impact whatsoever on your existing lines of credit, such as credit cards. You can continue to use them as you regularly would even when your credit is frozen.

Passage of the the Economic Growth, Regulatory Relief, and Consumer Protection Act which goes into effect on September 21st, 2018, will offer these changes:  

  • Allows adult consumers to freeze their credit for free.  Until the new law takes place in September, the cost to "thaw" your reports at one of the agencies ranges from free to $10. 
  • TransUnion, Equifax and Experian will all have a webpage on their websites for requesting fraud alerts and credit freezes. 
  • Active members of the U.S. military will be able to receive free electronic credit monitoring from the three major credit-reporting agencies no later than one year after the bill is enacted.
  • Parents or guardians can place credit freezes on their children under age 16.

More points to remember about freezing your credit:

  • When you do a credit freeze, it is imperative that you freeze your credit with all three bureaus.
  • Four states remove your credit freeze automatically after seven years.  These states are Kentucky, Nebraska, Pennsylvania and South Dakota.
  • You shouldn't freeze your credit, if your credit reports are accessed often for work or because you create new accounts with various financial institutions on a regular basis.
  • The Fair Credit Reporting Act also provides a way to freeze your credit by installing a fraud alert on your credit reports. 

Next, Rob and Steve tackle listener questions at 800-525-7000 and via email to Questions@MoneyWiseLive.org on a variety of topics:

  • If you have a small business that is growing but need for $10,000 to keep the business running, should you consider taking out a personal loan? 
  • Does credit freezing affect automatic payments set up at your credit card company?
  • Does freezing your credit keep you from getting a replacement credit card when a compromise happens?
  • If you're thinking about adding life insurance to your portfolio for death benefit and long term care provision, how do you know what the right policy is and how much to buy?
  • If you're about to receive half a 401(k) from a divorce, what sort of account should you put this in and can you remove money from it under hardship such as divorce?
  • If you're able to pay for your child's education, should you do that instead of allowing them to get a student loan?
  • Do you need to place a fraud alert on your credit if you already have a freeze on your credit?
  • Did PIN numbers used to remove credit freezes get compromised in the Equifax hack a few years ago?

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