Credit Freeze Files: New Laws and How to Use Them

Credit freezes help prevent thieves from opening new lines of credit in another person’s name, but most states allow credit bureaus to charge a fee for the service. That will change this autumn.

A new federal law will make it possible to receive a free credit freeze, a step that could help thwart identity thieves.

Starting September 21, people will be able to apply for free credit freezes and year-long fraud alerts.  Eliminating fees will make this security tool more accessible and will restrict access to your credit file through the big three reporting agencies - Equifax, Experian and TranUnion - making it harder for identity thieves to open new accounts in your name.

That means a new creditor can’t retrieve or review your credit report if you’ve frozen it. In theory, this should prevent any new lines of credit from being opened in your name. Anyone who freezes their credit file will have to request the credit bureaus unfreeze it if they wish to apply for a loan or other credit line themselves.

Currently, credit freezes typically involve fees which vary from state-to-state and company-to-company. Those fees will go away in September, allowing consumers to freeze and unfreeze their credit files throughout the country.

The law - officially called the Economic Growth, Regulatory Relief, and Consumer Protection Act - comes in response to last year's Equifax breach, which exposed information of more than 140 million Americans. 

The legislation requires credit bureaus to freeze an account within one business day of a request made online or over the phone or within three business days when notified by mail. An account must be reopened - or "thawed" - within one hour of a verified request by phone or online and within three business days after receiving a request by mail.

In addition to providing free credit freezes for adults, the law allows parents to freeze the credit of their minor children as well. Doing so prevents someone from opening an account using a child’s name and Social Security number without the parent’s permission or knowledge.

One thing to consider before placing a credit freeze on an account is whether you’ll be making a major purchase in the near future. This may be particularly important for those in the market for a new home.   Homebuyers who need to quickly get preapproval for a property in a competitive real estate market could find the process of unfreezing credit to be cumbersome.

Each credit bureau provides a phone number as well as a web form that can be used to make a freeze request. Consumers who want all three bureaus to freeze their file must contact all three companies separately. Once their identifying information is verified and the freeze is enacted, a PIN number will be issued. Since each credit bureau issues its own PIN, consumers may have three numbers to store. To unfreeze a credit file, the correct PIN must be provided to the issuing bureau. If that number has been lost, the process of unfreezing a report can be further delayed.


Presented by Mary Moore, CFP®