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    Identity Theft Is On The Rise — Here's How A Credit Freeze Can Help Protect You

    Identity theft is no joke.

    Coronavirus has wreaked major havoc in all facets of life, and identity theft is no exception. The Federal Trade Commission (FTC) reported nearly 1.4 million cases of identity theft in 2020, about double the number from 2019.

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    One way to protect your identity during COVID-19’s reign is to freeze your credit. Though credit freezes alone won’t completely prevent identity theft, they can make it that much harder for a scammer to take advantage of you.

    Here are 9 important things you should know about credit freezes:

    1. Having your personal info out there puts you at risk for identity theft.

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    Identity theft happens when someone gets a hold of personal information — like a social security number or driver’s license number — and uses it to apply for credit, get medical services, or even file taxes. Doing these actions with personal information that doesn’t belong to you is fraud, a punishable crime.

    Sadly, the number one perpetrator of identity theft is family and friends, says Daniel Roccato, a clinical professor of finance at the University of San Diego. “And the reason is obvious: They have easy access to both your trust and information."

    Keeping your wallet out of your nieces and nephews’ reach is a good start but if you're concerned about identity theft, you can also contact the three credit bureaus to request a credit freeze.

    2. A credit freeze restricts access to your credit report so thieves can't open new accounts in your name.

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    A credit freeze — also known as a security freeze — is a free tool that restricts access to your credit report. That way, your thieving nieces and nephews (or whoever) can’t open new loans or credit accounts in your name.

    Some institutions can still access your credit report even if it’s frozen, however. For example, any creditors you currently have accounts with (like a credit card), debt collectors, and the government can still access your file.

    Credit freezes are somewhat new in the personal finance world. You couldn’t freeze your credit until September 21, 2018, when a new law required the three credit bureaus to make this tool available to consumers.

    3. You’ll have to ask not one, not two, but THREE credit bureaus to freeze your credit.

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    To totally freeze your credit, you’ll have to go through the process with all three credit bureaus — Experian, Equifax and Transunion. All three have an option on their websites to request a freeze by filling out a form with personal information like your name, social, birthday, etc. You can also call to request a freeze or send your request in the mail. In some situations, like if you are a guardian, you may also be able to freeze a loved one’s credit.

    If you request a freeze by phone or online, then the credit bureaus are required to freeze your credit within one business day. If you contact them about a freeze by mail, then they must freeze your credit within three business days of getting your letter.

    4. You can freeze your credit anytime you want to.

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    You might consider preemptively freezing your credit for protection during the scam-heavy pandemic, but some people only choose to do so after they’ve had their identity or personal data stolen or have been the victim of a security breach. It's a personal decision and it's totally up to you.

    5. It's free to freeze your credit and it won't hurt your credit score.

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    Freezing credit doesn’t impact your finances either; it’s free to freeze and unfreeze credit, and it doesn’t affect your credit score. And you can still look at your credit report or check your scores during a freeze.

    While the process can be pretty straightforward, you just need to remember that you’ll have to unfreeze it too. And some of the situations that require access to credit reports just might surprise you…

    6. You will have to remember to unfreeze your credit before you can use it again.

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    The most common situations when people need to unfreeze include applying for a loan and getting a credit card. But there are a few others you might not think of — for example, financing a new car, setting up a new cable service, getting a new cellphone. Basically, anything that requires companies to access your credit report. If a business can’t access your credit, they can deny you services.

    So, credit freezes aren’t a “set it and forget it” tool but one you need to manage and turn off and on when necessary. “If you have the ability, the time, and the effort to put into it, it can be a great way to protect yourself,” says Roccato.

    7. Luckily, when you're ready to unfreeze, the process is pretty quick.

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    If you need to unfreeze your credit, you can fill out a form online at the three credit bureaus or call them. According to the FTC, the credit bureaus must unfreeze your credit within an hour if you make the request online or over the phone. So it doesn't take long at all.

    If you're applying for a loan or job and can find out what credit bureau the creditor or company will be checking, you could just unfreeze your credit with that one bureau instead of all three.

    8. If a credit freeze doesn't sound right for you, you have other options to protect yourself.

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    A credit freeze isn't the only way to protect yourself. Bobbi Rebell of debt payoff app Tally, says consumers can get a “credit lock,” which usually requires a fee but is easier to unlock than a freeze. You can also sign up for services to alert you of suspicious activity.

    “One alternative to a credit freeze is to subscribe to an identity-monitoring service that will alert you if there’s been an inquiry on your credit or application for a new line of credit,” says Rebell. “This won’t protect you but it’s a way to be aware of any unauthorized activity.”

    You might also consider setting a fraud alert. This keeps your credit reports open for creditors to view, but they have to contact you to verify your identity before opening new accounts.

    9. But identity theft is *still* a risk — even with frozen credit.

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    While you can add extra layers of protection by using paid services, being diligent about monitoring your accounts, and not giving out your personal information, it just might not be enough.

    “Certain data breaches have had information such as driver's license data, name, address, [and] birth date taken,” says Jeanne Kelly, the CEO of credit coaching company Kelly Group Credit Coaching, Inc. “None of these items of information will be protected by a credit freeze. Only your credit report. These are all pieces of information that could be used to create fake identity documents.”

    Unless you’re willing to go ~completely~ off the grid, there’s no foolproof way to 100% protect your identity. Still, if you're concerned about identity theft, then freezing your credit is a relatively easy (and free) way to get some protection.

    Have you ever been a victim of identity theft? Share your story (and how you protect your info now) in the comments below.

    And for more money tips and tricks, check out our other personal finance posts.

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