A credit freeze (also known as a security freeze) can be a great weapon against identity theft. It lets you restrict access to your credit report, thwarting fraudsters and con artists who attempt to open accounts in your name. Lenders won’t extend credit if they can’t check someone’s payment history.
“In the recent Equifax data breach, 143 million Americans’ personal identification information was stolen,” notes Associate Partner Ren Cicalese III, CPA, MST. “As just about half of the national population was impacted, monitoring your credit and freezing your credit should be strongly considered to protect against identity theft.”
If you suspect a crook is attempting to gain unauthorized access to your credit report, a credit freeze is a good first step.
A credit freeze places a lock on access to your credit report. While it presents an extra step when you need to obtain new credit, it helps prevent false new accounts being opened in your name. To go through with a credit freeze, you need to contact each of the nationwide credit reporting agencies. You will need to provide personal information in writing, including your:
Expect to pay a fee to each reporting agency typically ranging from $5 to $10, unless you’re over age 65 or can prove via a police report that you’re a victim of identity theft. “In New Jersey, a credit freeze is a free service,” adds Ren III. “However, there is typically a $5 charge to unfreeze your account.”
Also be aware that freezing your credit report will not automatically freeze your spouse’s report. You’ll have to do this for each of the three credit reporting agencies: Equifax, Experian and TransUnion. One credit agency is not obligated to inform the other two about the request.
However, according to Manager Chris Cicalese, CPA, “a credit freeze should not be confused with a fraud alert. When you are on a fraud alert your information can still be provided by the credit reporting agency. Credit freeze offers more security, but also involves a level of inconvenience.”
Placing a freeze on your credit report doesn’t affect your credit score or prevent you from ordering copies of your report. A credit freeze will typically last until you remove it, either permanently or temporarily with a designated PIN or password.
“Unfreezing your credit is fairly simple process. As long as you have the designated PIN or password provided by the credit agency, you’ll be able to freeze and unfreeze your credit without much difficulty.” – Ren III
Government agencies, such as taxing authorities, still have access to your credit report. It also may be released in response to court orders, subpoenas or search warrants. And collection services and current creditors will still be able to get the information they need to contact people. In other words, a credit freeze won’t shut out legitimate debt collectors.
If you’re planning to apply for a job, take out a mortgage, switch utility providers or shop for insurance, find out which credit reporting agency each business typically uses. That way you can remove the specific credit freeze needed while still roadblocking other credit reporting avenues from identity thieves.
Being proactive about thwarting identity theft attempts isn’t a matter to be taken lightly. Your Alloy Silverstein accountant and advisor can help you review your credit history, obtain IRS pins, and install a credit freeze with Identity Theft Defense. Contact us for more information.
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