Credit Freezes Are Now Free Due to New Federal Legislation

New federal legislation as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act eliminates the cost of credit freezes to help people reduce the threat of identity theft.  Virginia Cooperative Extension has provided information about the legislation, which went in to effect Friday, September 21, 2018.

The purpose of a credit freeze is to prevent a would-be fraudulent actor from taking out a new line of credit in your name.  For example, if your information was exposed in a data breach, and someone has your name, address, and social security number, that person could attempt to open a new line of credit in your name.  However, if you have a freeze on your credit file, they would be unable to do so.  The credit freeze basically prevents the financial institution from looking at your credit report, which they must do prior to extending you new credit.

Many consumers may have first heard of a credit freeze when news broke regarding the Equifax data breach in September of 2017 that affected 140 million American consumers.  The new legislation is significant for two reasons.  First, it aims to raise awareness for consumers that they can freeze their credit file.  Second, it now lets consumers freeze each of their credit files from the three major credit reporting agencies for free.  Those agencies are Equifax, Experian, and Transunion.  Prior to September 21, 2018, a credit freeze for Virginia residents, for example, would cost $10 per credit reporting agency for a total of $30.

The process of requesting a freeze can be done online, by phone, and by mail.  Each of the three credit reporting agencies have dedicated webpages and 1-800 numbers where you can freeze your file.  If you are going to freeze your credit file, you will want to freeze all three, as only choosing one or two of the three serves little to no purpose.  People can also freeze credit files of their children under age 16 for free.

A downside to freezing your credit file is the inconvenience when you decide you personally want to open a new line of credit.  For example, if you have a credit freeze and you want to take out a new mortgage, you will want to contact your financial institution and ask them when they will pull your credit reports and from which credit reporting agencies.  You will then want to unfreeze your credit file for any credit reporting agency your financial institution needs to look at.  You will need to provide a personal identification number, or PIN, that was given to you when you froze your file and indicate how long you want the file to be unfrozen.  This bit of inconvenience regarding a credit freeze is very small when compared to trying to fix your credit if there is fraudulent activity.  In addition, everyone is advised to check their credit report, which can be done for free at www.annualcreditreport.com once per year from each of the three major credit reporting agencies.

In addition to credit freezes, consumers are now able to put fraud alerts on their credit files that will last twelve months.  Prior to September 21, 2018, that fraud alert would last ninety days.

To learn more, folks can visit the link at the posting of this story on www.alleghenymountainradio.org .  The link contains information from the Virginia Cooperative Extension, including contact data, an interview with Virginia Tech Assistant Professor of Agricultural and Applied Economics, Travis Mountain, and NewsRadio WINA’s Les Sinclair, and other website links, used to compile this story.

That link is: https://pubs.ext.vt.edu/content/dam/pubs_ext_vt_edu/AAEC/aaec-162/AAEC-162.pdf