Are credit freezes worth your time and money?
By Laura Mohammad
February 28, 2014
Being the little sister, advice comes in abundance from my two older brothers. It’s immaterial that we are all living in our sixth decade. I’m still the baby.
So, no surprise when there was a recent flurry of email activity between us over the Target data breach brouhaha. The holiday breach was just the beginning of a retail fiasco that included some of the industry’s most prominent names, including Michaels, White Lodging and Neiman Marcus.
So what was the upshot of my brothers’ advice (which I might add, is always well-informed and 99 percent of the time appreciated)? It turns out that one of them recommended a credit freeze. Swears by it. Loves it. Wouldn’t have it any other way.
A credit freeze is an order placed with credit bureaus Experian, TransUnion and Equifax that prevents lenders and other companies from viewing your credit report. When you “thaw” or temporarily lift the freeze, you are allowing the release of your credit report.
Here’s how it works: My brother Byron keeps a freeze on his credit reports with all three bureaus most of the time. This ensures that folks who have no business accessing his credit information don’t get it. When he took out a loan to buy his new house, he “thawed” the freeze temporarily, allowing lenders to access his information so he could get approval for a loan. Once the house was closed on and he moved, he reactivated the freeze.
Byron is a cautious fellow, and it gives him peace of mind to know that an identity thief or other unsavory sort isn’t taking out credit cards in his name.
Freezes, thaws and removals typically cost $10 each time for regular consumers and are free for people who believe they are victims. The costs vary according to state law, however. Senior citizens and kids under 16 sometimes get a break.
Now, $10 times three credit bureaus doesn’t sound like much for a little peace of mind, right? But remember that every time you thaw or reset a freeze, that’s another $10 or so. That was the first problem I saw in my cautious brother’s advice.
So, before I proceeded, I wanted to know more about other downsides. I turned to Experian Director of Public Education Rod Griffin.
Almost immediately, Griffin warned me that freezes aren’t for everyone. In fact, he says, if you aren’t a victim, you probably don’t need one, particularly if you are credit active. For example: “People don’t realize that cell phone companies regularly check for credit. What if you are applying for new service or renewing service or changing providers?” he asks.
Also, he notes, you are removing yourself from the credit marketplace, something you may not mind if card companies are making you crazy with offers. But you won’t get preapproved offers, if that matters to you.
On the other hand, if you are obsessive about protecting your data, freezes can be a good option. “But, you need to take into account all the factors around it,” Griffin says.
In most cases, your credit file can be thawed by telephone, online or by mail, and is typically lifted within an hour or even 15-20 minutes. However, Griffin says, Experian asks that you allow for a day or two, because additional documentation may be needed.
Credit freezes are for those of us who are organized. If you lose the PIN code you get when you sign up and need to thaw your file, there will be a delay for documentation. Also, new parents, students and people in their early 20s are usually credit active, making credit freezes a poor option. “Look at your financial situation and your personality. My file isn’t frozen, and I see no need to freeze it,” Griffin says.
But my brother isn’t alone in loving credit freezes.
Blogger Clark Howard loves the credit freeze option and offers step-by-step instructions on launching freezes with the three credit bureaus.
Financial attorney and debt specialist Leslie Tayne recommends freezes for people who are elderly or ill and can’t regularly monitor their accounts. For example, my dad was a perfect candidate. In his later years, he didn’t have a computer and wasn’t taking out loans, new cards or changing service providers.
Maybe I’ll take my brother’s advice and order credit freezes down the line, but not right now. We are in the market to buy a house, so we’ll be taking out loans and changing service providers soon. But I’m leaving it open as a possibility.
If you want to pursue credit freezes, check out what the three bureaus have to say:
You have to work a little harder to find the freeze information on the Experian site, but it has a wealth of information. Go to the bottom of the page and select your state. Or, you can search Google this way: “(Your state) Experian Credit Freeze,” and you get the page for your state of choice.