Freeze your Credit (and be happy)

2018-09-12 0 By SecureSteve

As many of you are aware, security breaches are no fun. Nor are scams. I’ve addressed both of these topics here and here. Sometimes, even talking to people about this situation is a hassle, as covered here.

I also covered some steps on what to do if you’ve been the victim of a breach here (link to “Data Breaches – What Do I Do?).

One of the recommended actions, especially if the data breach involves your Social Security number is to consider a Credit Freeze.

If you have a credit freeze, a bad actor cannot open a new credit card in your name, and take advantage of your stolen data that they possess.

So just do it. It is one of the most simple, effective ways of protecting your online financial security.

Hold on, wait a second. A Credit Freeze? What is that and why does it help me?

Let’s take a quick step back an consider some of the major breaches that have happened.

What data is in a breach?

Most of us are aware of the Target and Home Depot breaches. The volume of data that was breached (aka stolen by the bad actors) was large, and it consisted of data such as:

name
address
phone number
email address
credit or debit card number

Now, if you were a criminal, which of the above data items would you be able to use “the fastest”? If you answered credit or debit card number, you are right!! (Go buy yourself a prize with that stolen number!). If the above data is sold on the dark web (21st century virtual black market), the most easily utilized data for the buyers are those credit and debit card numbers.

Now, to be fair, the other data points ‘could be valuable’, but the chance that someone is going to go through the effort to take over your name, address, and/or life is typically small. This is unfortunately less true if your name is John Smith or Jane Doe. Those people just can’t catch a break!

You haven’t talked about Credit Freezes yet. When are you going to get to the point?

Almost there, bear with me! Keep reading just a bit longer!

Isn’t it bad if my credit card or debit card number is stolen?

It is certainly not ideal if your credit or debit card number is stolen. However, a thing to note about things like stolen credit and debit card numbers, is that they are easily changed. Your bank, financial institution, store lender, etc. can easily cancel those card numbers, and give you a new one. According to CreditCard.Com, each issuer has around 1 Trillion total possible card numbers to be able to issue. So, they can easily cancel yours and give you a new one. (If you like more information about what each of those credit card digits actually mean, there is a great read at CreditCard.com here. In addition, most banks/lenders have many sorts of fraud prevention, to ensure you are not held liable for charges that you did not make.

So, it sounds like data breaches aren’t SO bad, right?

The generic answer is “it depends”. A slightly more detailed answer is “it depends on what data was breached”. Consider our data example above:

name – This is a hassle to change, but typically does not give criminals a ton of access. (Also, don’t you regularly go “where everybody knows your name?”)
address – This is a hassle to change, but typically does not give criminals a ton of access (just lock your doors).
phone number – This is easier to change, but with Caller ID, is not usually a major problem.
email address – This is super easy to change, but we recommend you also change your password
credit or debit card number – Risk was discussed above, and there are several options to change

…now if the data stolen is your…

social security number – This is extremely difficult to change. This gives criminals TONS of access. This can allow criminals to set up all sorts of credit cards or lines of credit, and can potentially wreak havoc on an individual’s financial security.

So, while the Target and Home Depot breaches were a hassle, they were not usually life impacting. In the case of the Equifax breach, criminals now have access to all of the data they need to cause some significant problems for an individual.

So where does the Credit Freeze come in?

First of all, placing a credit freeze on your behalf means that no NEW lines of credit can be opened with your information and social security number. In addition, no NEW sources can access your credit information. Thus, if you have a credit freeze, a bad actor cannot open a new credit card in your name, and take advantage of your stolen data that they possess.

What a Credit Freeze does and does NOT do:

According to a great article at NerdWallet.com:

A lender can’t check your credit until and unless you unfreeze your credit. That process should take just a few minutes, but you’ll need the PIN you used when you froze it.

A credit freeze won’t affect:

- Any credit monitoring service
- Pre-screened offers of credit; you need to opt out separately from these solicitations
- Any credit scores you receive with a credit card statement
- Your ability to use your existing credit accounts — but that also means that if a thief makes charges on an existing account, a freeze won’t help you

Keep in mind that a PIN will be required to unfreeze, as mentioned above. DO NOT LOSE THAT PIN NUMBER.

Does a Credit Freeze affect your Credit Score?

Also from NerdWallet:

Freezing your credit does not mean you cannot use credit; you still make loan and credit card payments as usual, and creditors continue to report your activity to credit bureaus.

A Credit Freeze DOES NOT AFFECT YOUR CREDIT SCORE, NOR ABILITY TO USE YOUR EXISTING CREDIT!

Does it cost anything to freeze my credit?

After September 21st, 2018, it costs ZERO to freeze your credit. The Big Three credit bureaus – Equifax, Experion, and TransUnion used to charge a fee to freeze and unfreeze your credit. Due to a federal law passed earlier this year, after Sept. 21, 2018 it will be free to freeze and unfreeze your credit file and those of your children or dependents throughout the United States.

Brian Krebs, on his website, give some good additional information: https://krebsonsecurity.com/2018/09/in-a-few-days-credit-freezes-will-be-fee-free/ For example, did you know that there are 46 different consumer credit reporting entities in the US alone? Wowza!

So, where do I go from here?

Contact each of the three main credit bureaus, and put a freeze on your credit files (thanks again NerdWallet):