If you’ve been a victim of identity theft or want to prevent yourself from becoming one, you might be considering putting a security freeze on your credit file. While a freeze is in place, it greatly reduces the chance that anyone will be able to open credit in your name.
Requesting credit freezes at all three credit bureaus is a good idea if someone has actually stolen your identity. It is also worth considering if you suspect someone has stolen or otherwise obtained your Social Security number or other information that can be used to open credit in your name. But a security freeze may not be the best solution if the theft involves only your credit or debit card information, as with the recent data breaches at Target and Neiman Marcus.
First off, the primary danger from these breaches is that scammers may use your existing accounts to charge purchases or withdraw money. Neither of those actions requires accessing your credit file, which a security freeze is designed to prevent.
A freeze also has drawbacks. While it’s in place, it prevents virtually everyone from accessing your credit files, even those you’ve authorized to do so (access still is permitted for companies with which you have existing relationships, such as your credit card issuers). That can create hassles, delays, and other problems if you need to apply for a loan, credit card, or a job; obtain insurance; rent an apartment; set up electric or phone service; and more. Most companies won't extend credit until they check your credit file at one or all of the three major credit bureaus. And some employers won't hire you without a credit check.
And unless you have a report from your police department or other agency indicating you’re a victim of ID theft, it likely will cost you to set up, remove, or lift a security freeze at the three major credit bureaus. Fees range from $2 to $15 per bureau, depending on your state’s laws.
Chi Chi Wu, a staff attorney at the nonprofit National Consumer Law Center, says consumers shouldn’t have to pay a fee to freeze their credit file under any circumstances. “We should have control over our own information,” she says.
But only Indiana and North Carolina have adopted that view, prohibiting bureaus from charging any fees to consumers who want to initiate or remove a freeze. South Carolina prohibits fees if the request is made electronically, instead of by telephone or mail. New Jersey doesn’t allow fees for placing a freeze, although bureaus can charge New Jersey residents up to $5 to remove it, even temporarily. Connecticut and Mississippi allow credit bureaus to impose a $10 charge even on ID theft victims who want to initiate a security freeze. Experian and TransUnion say they won’t charge victims anyway. But Equifax will.
State laws can vary in other ways as well. Many states don’t allow bureaus to charge fees to older people who want to freeze their credit files, although you have to be at least 62 to qualify in some states and at least 65 in others. Nebraska prohibits bureaus from charging fees to freeze credit files of those under 19 years old.
While most states require bureaus to maintain a freeze until the consumer removes it, some, including Kentucky, Nebraska, and Pennsylvania, automatically remove the freeze after seven years. Most states allow consumers to lift a freeze temporally so they can apply for credit and then have the freeze resume automatically after a certain period. The fee ranges from $2 to $12, although it too is free for ID theft victims in many states and for all residents of Delaware, the District of Columbia, Indiana, North Carolina, Tennessee and, if the request is made electronically, in South Carolina.