Data breaches at retail establishments and universities seem to be abundant these days. And if you’re like most of us, you may be wondering if there’s anything you can do to help protect yourself—and your credit—from prying eyes.
According to the Federal Trade Commission (FTC), the nation’s consumer protection agency, there is an important tool you may consider: a credit freeze—or security freeze—on your credit report. By employing a credit freeze, you essentially restrict access to your credit report.
The reason this tool is so effective is that creditors must review your credit report before approving new accounts. If they are unable to access your credit file, they are unlikely to extend credit. As a result, restricting access to your credit report puts the brakes on identity thieves who would open new accounts in your name.
To place a freeze on your credit reports, you’ll need to contact each of the nationwide credit reporting companies: Equifax, Experian, and TransUnion. Be prepared to share with them your name, address, date of birth, Social Security number and other personal information. There are also fees for this service. They are based on your address, but they typically are only between $5 and $10.
A credit freeze does not affect your credit score or prevent you from getting your free annual credit report. You can still open new accounts, apply for jobs, rent an apartment, and buy insurance, but you’ll need to lift the freeze temporarily, either for a specific time, or for a specific party, say, a potential landlord or employer. The cost and lead times to lift a freeze vary, so it’s best to check with the credit reporting company in advance.
Although a credit freeze is an effective tool, it won’t prevent a thief from making charges to your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.