Freezing Credit: Why You Should and How You Can

According to the Federal Trade Commission, consumer loss from fraud hit an all-time high of $10 billion in 2023 - up 14% from the previous year.1 This statistic is startling.  How can consumers help to protect themselves? While there are many ways, this article will focus on one in particular that can help protect you from credit fraud. 

What Is It and Why Do It?

A credit freeze is a process that allows you to have more control over your credit report. When credit is frozen, the credit bureaus (Equifax, Experian, and TransUnion) limit access to your report. How does this help? When you apply for a credit card or a loan, your credit report will be accessed. When the credit bureaus deny access to your credit report, scammers can’t open fraudulent loans or credit cards in your name. Frozen credit is one of the best ways to protect your credit.

What’s the Process?

Not only is it a great way to protect your credit, it’s also free and easy.  You will need to go to each of the credit bureaus (Equifax, Experian, and TransUnion) and freeze each of your accounts.  The process itself is straightforward and the websites will walk you through the steps.  Freezing your credit online is the quickest and easiest way but you can also freeze it by phone.  If you decide to freeze by phone, you will most likely have to answer questions to authenticate your identification. Freezes typically happen right away when you do it online but can take up to three days to process by phone or mail.

Any Downsides?

As with most things in life, there are downsides. You need to remember this is not an all-encompassing solution to identity theft protection.  While it does mean people cannot take out loans or credit cards in your name, there are still ways (like opening utilities or bank accounts in your name) that someone can steal your identity.  Even with the credit freeze you need to stay vigilant. The other negative of a credit freeze is that, not only does it prevent criminals from getting loans in your name, but it also prevents you from getting loans or credit cards. If you decide to buy a house or car or if you want to get a new credit card, you will need to unfreeze your credit.  This process is as simple as freezing and, if done online, can be unfrozen instantly in most cases. When getting a loan, you can ask the lender which bureau they plan to run your report through, and you can unfreeze that one bureau instead of unfreezing them all. You can unfreeze it indefinitely or set a time limit so that the freeze automatically resumes.  If you set a time limit, you’ll need to check with the lender first so you give them enough time.  Another thing to keep in mind is that some insurance companies pull credit information for special rates so you might need to check with your insurance company if you see any rate changes.

More Questions?

While there are many dangers in our global connected technological age, there are also many easy steps you can take to help protect yourself and enjoy the benefits. If you have questions on credit freezes or other ways you can safely navigate your finances, set up a call with us today.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by GW Financial, Inc. to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 GW Financial, Inc.