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Finally, anyone in the U.S. can freeze his or her credit report.
The question remains: Should you?
A credit freeze, for those who don't know, is a way to block your credit reports to make it a lot tougher for an identity thief to get a loan or open a credit account in your name. That's because while a freeze is in place, no one, not even you, can open an account in your name. Lenders, insurers and even employers doing background checks are not able to access your credit file.
You can have the freeze lifted, or "thawed," if you need to get new credit, but you have to give the bureaus a specially issued personal identification number and a few days' notice to do so.
Since California pioneered the first credit freeze law in 2003, 38 other states and the District of Columbia have passed laws allowing at least some residents to lock up their credit reports. Now, the three major credit bureaus -- Equifax, Experian and TransUnion -- have decided to extend credit freezes to everyone who wants them, even in the 11 states that haven't passed a law mandating them.
Fraud alerts, credit freezes differ
Despite their rapid spread, credit freezes remain a bit of a mystery to consumers. Many people don't realize they have access to this tool. Others confuse credit freezes with old-fashioned fraud alerts, which allow consumers to put an electronic red flag on their credit reports at the three bureaus.In a couple of ways, credit freezes and fraud alerts are similar. Neither prevents or limits you from using the credit you already have. And neither prevents your current lenders from cruising your credit reports to see how well you're handling your cards, loans and lines of credit.
But freezes and fraud alerts differ in several important ways:
Fraud alerts can be ignored by lenders. By law, lenders who see a fraud alert on your file are supposed to take "reasonable steps" to verify the identity of someone who is applying for credit in your name. Those steps haven't been spelled out, however, and consumer advocates say fraud alerts are too often ignored.
"The law-enforcement folks I talk to say the fraud alert is not doing what it's supposed to do," said Michelle Jun, a staff attorney for Consumers Union, the nonprofit that publishes Consumer Reports magazine and that runs FinancialPrivacyNow.org, a site that pushed for nationwide availability of credit freezes. "Lenders and retailers aren't paying attention to it."
When you have a credit freeze in place, however, ignoring it isn't an option. Lenders who try to view your reports to check an application for credit just get a code saying your reports are frozen.
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Fraud alerts are pretty easy to put in place. All it typically takes to get a fraud alert is a phone call to each credit bureau. (The bureaus say you need to contact only one of them and that the fraud-alert information will be shared with the other two, but that doesn't always work.) By contrast, to get a credit freeze you have to send a letter via certified mail that includes a bunch of identifying information and, typically, two proofs of your residence, such as copies of your driver's license and a utility bill. (The rules differ somewhat by bureau; follow the links to find the information you need for Equifax, Experian and TransUnion.)
If you want to lift the freeze so you can get credit, you typically have to notify the bureaus, supply the PINs they gave you and then wait. The amount of time the bureaus have to honor your request varies by state. Kentucky gives the bureaus 10 business days; California requires the freeze to be lifted within three days. Utah passed a law that says the freeze must be lifted within 15 minutes, Jun said, but that won't go into effect until September 2008. In any case, because a freeze puts an end to "instant credit," you'll actually have to plan ahead if you want to open an account (which, for most of us, is not such a bad thing).
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Easier credit freezesThere's one way to make sure identity theft won't happen to you: Freeze your credit file so nobody -- including you -- can open a new account. The process of freezing your file just became easier.
Fraud alerts are free. With a credit freeze, you'll typically have to pay $10 to $12 to each bureau to freeze your credit reports, for a total cost of $30 to $36. The fees are waived in many states if you're a victim of identity theft, and a few states also waive fees for senior citizens. You can check the chart below, or get more state-by-state details at FinancialPrivacyNow.org.
Lifting and reinstating the freeze may also cost money. In several states, you'll pay $10 to each bureau for a general credit-report thaw, or $12 per bureau to thaw your report for a single lender. Fees can also be assessed for removing the freeze completely or for reissuing a PIN if you forget it.
Fraud alerts expire. In as little as 90 days, a fraud alert can disappear from your file. You can keep renewing it -- if you remember. You also can extend the alert for seven years, but only if you're a victim of identity theft with a police report to prove it. By contrast, a credit freeze generally remains in place until you lift it -- that is, in every state except South Dakota, where credit freezes expire in seven years.
State-by-state credit freeze facts
(Fees are typically waived for identity theft victims.)| State | Fees and other facts |
|---|---|
Alabama | $10 to place, lift or remove |
Alaska | $10 to place, lift or remove |
Arizona | $10 to place, lift or remove |
Arkansas | $10 to place, lift or remove |
California | $10 to place; $10 to $12 to lift |
Colorado | No fee for first freeze, $10 to lift or reinstate |
Connecticut | $10 to place; $10 to $12 to lift |
Delaware | $20 to place, free to lift or remove |
District of Columbia | $10 to place, free to lift or remove |
Florida | $10 to place, free to lift or remove |
Georgia | $10 to place, lift or remove |
Hawaii | $5 to place, lift or remove |
Idaho | $10 to place, lift or remove |
Illinois | $10 to place, lift or remove |
Indiana | $10 to place, lift or remove |
Iowa | $10 to place, lift or remove |
Kansas | $10 to place, lift or remove |
Kentucky | $10 to place, lift or remove |
Louisiana | $10 to place, $8 to lift |
Maine | $10 to place or remove, $10 to $12 to lift |
Maryland | $5 to place, lift or remove |
Massachusetts | $5 to place, lift or remove |
Michigan | $10 to place, lift or remove |
Minnesota | $5 to place, lift or remove |
Missouri | $10 to place, lift or remove |
Mississippi | $10 to place, lift or remove |
Montana | $3 to lift, place or remove |
Nebraska | $15 to place, free to remove |
Nevada | $15 to place, $18 to $20 to lift |
New Hampshire | $10 to place, lift or remove |
New Jersey | $5 to place, lift or remove |
New Mexico | $10 to place, $5 to lift or remove |
New York | Free to place, $5 to lift or remove |
North Carolina | $10 to place, lift or remove |
North Dakota | $5 to place, lift or remove |
Ohio | $10 to place, lift or remove |
Oklahoma | $10 to place, lift or remove |
Oregon | $10 to place, lift or remove |
Pennsylvania | $10 to place, lift or remove |
Rhode Island | $10 to place, lift or remove |
South Carolina | $10 to place, lift or remove |
South Dakota | No fees permitted; expires after 7 years |
Tennessee | $10 to place, lift or remove |
Texas | $10 to place, lift or remove |
Utah | $10 to place, lift or remove |
Vermont | $10 to place, $5 to lift or remove |
Virginia | $10 to place, lift or remove |
Washington | $10 to place, lift or remove |
West Virginia | $5 to place, lift or remove |
Wisconsin | $10 to place, lift or remove |
Wyoming | $10 to place, lift or remove |
Source: Consumers Union, Equifax, Experian and TransUnion
The fees you pay and the hassles you endure for a credit freeze make it clear: The credit bureaus would much rather you place fraud alerts on your files than to freeze them entirely. The bureaus are in the business of collecting and selling credit information about you; anything that impedes that costs them money.
Not that you need to care. What matters most is whether a credit freeze makes sense for you.
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