A recent and unprecedented data breach reportedly exposed personal information on millions of Americans – including, maybe, the Social Security Number you use to apply for credit cards. There's never been a better time to protect yourself.
A lawsuit filed late last week against National Public Data, a mass data aggregator, confirmed that 2.9 billion records – including names, Social Security Numbers, addresses, emails, and other personal information – were recently leaked online after a data breach. While there are a handful of steps you can take to reduce the chances your data is stolen in the first place, freezing your credit is an easy and free way to limit any damage now.
Any time you apply for a new line of credit like an auto loan, credit card, or home mortgage, the bank pulls your credit report from one (or more) of the three main credit bureaus: Experian, Equifax, and TransUnion. But if your credit is frozen, the bank that's considering whether or not to lend you money can't access your credit report: They will automatically deny the application instead.
That creates an extra step to get your next credit card or loan, as you'll have to unfreeze your credit in order to apply. But it's also an invaluable layer of protection that will prevent anyone from stealing your identity to open a credit card in your name, among other fraudulent activity.
Read on for step-by-step instructions on how to freeze your credit as well as some other tips and tricks for protecting your financial well-being.
How to Freeze Your Credit
There are three big credit bureaus in the U.S. that banks use to gauge your creditworthiness: Experian, Equifax, and TransUnion. To fully ensure your personal information isn't used to open any new lines of credit, you'll need to initiate a free credit-freeze with all three – individually.
Just remember: A credit freeze not only keeps fraudsters from opening new accounts in your name, it will also keep you from getting approved instantly.
If you're intending to open a new credit card or refinance your house, you'll want to unfreeze (or thaw) your credit before submitting any application. With a little research, you can generally figure out which bureau each bank uses for credit decisions and only thaw that specific report. Some banks, however, will pull all three credit reports with a single application, meaning you'll need to log in and unfreeze your credit with each of them.
Thankfully, it's a quick and easy process with all three bureaus – and well worth the added peace of mind.
Freezing Your Credit With Experian
If it's your first time initiating a credit freeze, odds are you won't have an existing account with Experian. In this case, you can start by creating a new account at Experian.com.
To get started, you'll need to enter the last four digits of your Social Security number and your phone number.
You'll then get a text asking you to verify your account request, allowing you to return to the the account registration page where you'll find the bulk of your personal information already filled in. If your information doesn't look right, or an address is out of date, you can update it at this time before continuing.
The next step in the process is creating a username (with an email address) and password. As a general best practice, it's best best to use a different (secure) password for all your different financial accounts. That way, if your password is ever compromised, you're not handing over the keys to all of your various bank accounts and financial log-ins.
After setting your username and password, you'll be logged into your new Equifax account. There, you can easily initiate a credit freeze by toggling the switch to “Frozen.”
If you want to apply for a new line of credit in the future, simply log back in to your Experian account and switch it to “Unfrozen” before applying. In general, unfreezing your credit should work instantly, so you can unfreeze your credit moments before applying for a new credit card. You can even schedule a thaw for a specific timeframe without needing to log back in and re-freeze it later on.
Freezing Your Credit With Equifax
Similar to Experian, you'll first need to create a myEquifax account before being able to freeze your credit report. To get started, you'll need to enter some of your own personal information like name, date of birth, Social Security Number, and address.
The next step in the process is creating a username and password for your new myEquifax account and then verifying your identity with via text message. After you're logged into your new account, you can easily freeze your credit by navigating to the “Identity” tab in the main menu, selecting “Freeze,” and hitting the “Place a Freeze” button.
Once a freeze is in place, you can temporarily or permanently lift it by selecting “Manage a Freeze” within your account.
Freezing Your Credit With TransUnion
Just as with the other bureaus, the first step to freezing your credit with TransUnion will be to create or log in to your account. You'll be asked for much of the same personal information like name, address, and the last four digits of your Social Security number when creating your account and also need to verify your identity through text confirmation before proceeding.
After your account is set up, you can add or manage a credit freeze directly from the main dashboard or by selecting “Credit Freeze” from the list of menu options. The final step in the process is simply selecting “Add Freeze” and then confirming your request on the next page.
Once you've placed a freeze on your TransUnion credit report you can temporarily lift it for a defined amount of time or remove it altogether.
Why You Should Freeze Your Credit
The biggest reason you should freeze your credit is to protect yourself from fraud and identity theft. With major data breaches and hacks becoming more and more prevalent, it only makes sense to take an easy step like this to protect yourself from unnecessary headaches and best of all, doing so is completely free.
The only real downside to freezing your credit is that you'll need to remember to unfreeze it before applying for any new lines of credit. For most people, that might not be much of a downside at all: something you do once or twice a year, if that.
However, if you're intending to make a major purchase like a new car or house, it might be best to shop around for the lowest possible interest rate, resulting in several credit applications over a short period of time. Thankfully, all the big credit bureaus let you temporarily lift a credit freeze for a defined amount of time without having to go back in and re-add it.
And while your credit report might be accessed from time-to-time for non-lending purposes like getting an insurance quote, leasing an apartment, or changing your utilities provider, you won't need to worry about a credit freeze impacting that. Credit freezes will only prevent lenders from accessing your credit report when it comes to making a lending decision on a new line of credit.
Other Tips for Protecting Yourself From Fraud
Keeping close tabs on your credit is one of the best ways to protect yourself. If you hold a credit card from just about any bank, they will likely provide weekly or bi-weekly updates to your estimated credit score.
The image below is from an American Express email, letting me know my FICO® Score went up since the last report. Similarly, I get regular notifications from other banks like Chase, Capital One, Citi, and Wells Fargo.
If you don't have a credit card or just want an easier way to stay on top of your credit, Credit Karma is another solid resource. It's a free service that also offers a mobile app that helps you monitor your credit score. It'll also give you recommendations about how to improve your score based on what is on your credit report.
Credit Karma provides free credit scores from both TransUnion and Equifax – Experian is, unfortunately, not included. The service will update your score weekly and, if you have the mobile app, will send you a push notification if there are any changes to your report.
It is by far the most efficient and easiest way to stay on top of your credit score. Plus, Credit Karma is using full bank-level encryption to protect the transmission of your personal data on their website. They also do not share your personal information with any unaffiliated third parties.
Related reading: Here's How Your Credit Score Really Works
Bottom Line
This latest massive data breach has many Americans on edge about fraud and identity theft – and rightfully so.
Freezing your credit with all three of the major credit bureaus is a quick and easy step you can take to ensure no new (unauthorized) accounts are opened in your name. Just be sure to unfreeze your credit before you submit your next credit application or you, too, will be denied.
Hello, if I freeze my credit at the 3 credit bureaus, will my credit cards no longer give me updates if my score goes up or down?
Hi Peggy, freezing your credit will only impact new lines of credit. You can still view your credit report and get regular score updates from current creditors.