If you are like my husband, when you see the weather report or hear the weatherman say the word “freeze”, you immediately think about all the yard tasks and preparation that needs to be done. While he is out disconnecting the water hose, I am most certainly planning what type of soup I am about to make. 

I’ll say this once – my husband is right that preparation for a temperature freeze is important. Did you know there is also a type of freeze in the financial world that is just as important from a preparation standpoint? A credit freeze is a way to prevent credit data from being accessed without your consent. You may have also heard this referred to as a security freeze. 

Why is it important? With fraud and identity theft on the rise, this is a preventative measure that can help to reduce your exposure to one of these risks. The number of fraud reports, identity theft reports, and other reports was 5,737,265 in 2021¹.

Thanks to a Federal Law that went into effect in 2018, you can place (and lift or remove) the credit freeze with each of the three credit bureaus (Experian, TransUnion, and Equifax) for free². 

• Experian: https://www.experian.com/freeze/center.html
• TransUnion: https://www.transunion.com/credit-freeze  
• Equifax: https://www.equifax.com/personal/credit-report-services/credit-freeze/

Various information will be required when placing the credit freeze including a Social Security number, a copy of a photo ID, and proof of residence³.

While you can purchase additional services to help monitor your credit files, a credit freeze is an easy way to do so on your own for no cost. Consider family members who may also be at risk of identity theft and fraud. For example, if you have minor or adult children named as authorized users on credit cards to help establish credit, they too can have their credit frozen.

There are a few tips to be aware of when freezing your credit, especially if you are actively accessing credit. 

1. If you apply for credit via a loan or credit card, you may experience delays as you will be required to lift the freeze for the company to gather your credit files. Online requests to lift the freeze process the quickest as the lift is granted within an hour, while phone requests and mail requests process within a couple of business days⁴. 
2. A lift of the credit freeze is not required for job applications, insurance purchases, or rental applications. 
3. Additionally, you will be required to set a PIN at the time you place the credit freeze. This PIN will be used to lift or remove the credit freeze and is important to store in a safe, secure place. If the PIN is lost, each credit bureau offers additional ways to unlock the freeze⁵.  

So just as important as it is to prepare for a temperature freeze to reduce exposure to unwanted or unplanned home improvement expenses, it is important to put a credit freeze into place to reduce the risk of fraud and identity theft headaches. 

If you have any further questions about the process of applying for a credit freeze, please contact your advisory team. 

Sources:

1. https://www.ftc.gov/system/files/ftc_gov/pdf/CSN%20Annual%20Data%20Book%202021%20Final%20PDF.pdf
2. https://www.consumerfinance.gov/ask-cfpb/what-does-it-mean-to-put-a-security-freeze-on-my-credit-report-en-1341/#:~:text=A%20security%20freeze%20prevents%20prospective,opening%20accounts%20in%20your%20name.
3. https://www.experian.com/blogs/ask-experian/what-to-know-before-freezing-your-credit/
4. https://www.transunion.com/credit-freeze
5. https://www.bankrate.com/finance/credit-cards/froze-credit-lost-pin/

The content of this article is developed from sources believed to provide accurate information. The information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. All expressions of opinion are subject to change. This content is distributed for informational purposes only, and is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products or services. Past performance is not a guarantee of future results. Index performance does not reflect the expenses associated with the management of an actual portfolio.