Using a credit card. Online shopping. (Adobe stock)

You can now freeze your credit reports from the three major credit bureaus free of charge. This is thanks to amendments to the Fair Credit Reporting Act that were passed as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act in the House of Representatives on May 22nd. The new regulations just came into effect last Friday.


Freezing your credit report has always been an option for those concerned with the issue of identity theft. One of the most common scenarios is ill intentioned people stealing your social security number and other information and then applying for loans in your name with no intention of repaying them. The best way to stop this is to freeze your credit report so no new hard inquiries can be carried out and thus no new credit accounts can be opened. In the past it cost between $3 and $10 to freeze a credit report with each bureau and then another fee to unfreeze the report. But the Equifax data leak last year shone a spotlight on security issues associated with consumer credit reports and prompted congress to act.


The changes are listed in section 301 of the bill:

“Upon receiving a direct request from a
consumer that a consumer reporting agency place a security
freeze, and upon receiving proper identification from the
consumer, the consumer reporting agency shall, free of
charge, place the security freeze.”


The law also sets out a timeframe for the freeze to be initiated:

“in the case of a request that is by toll-free
telephone or secure electronic means, 1 business day after
receiving the request directly from the consumer.”


A credit freeze isn’t totally foolproof, for example if hackers manage to break into a company’s system and steal pins for the frozen accounts, or if you store your pin electronically and your computer is hacked. But those situations are pretty rare, and in the case of a company getting hacked you may be entitled to compensation anyway.


One question people often ask is can they still check their own credit if they have frozen their report. The answer is yes you can, but there are a few things you should take note of. I will use the example of Credit Karma who lists details of how their service works with frozen credit reports on their website. Credit Karma say if you have placed a freeze on your credit report you won’t be able to sign up for new account with Credit Karma. However if you already have a Credit Karma account set up, then initiating a freeze won’t affect your Credit Karma account and you will be able to continue checking your credit through their system.


In addition to free credit freezes, congress made another amendment to the Fair Credit Reporting Act and that was to extend short term fraud alerts, which are free, from 90 days to 1-year. A fraud alert means that when a credit bureau receives a hard credit inquiry, they alert the lender that initiated the inquiry that you may be a victim of identity theft and that lender will then take extra steps to verify your identity such as contacting you and asking if you applied for a loan etc…


These improved consumer protections can be seen as a “silver-lining” in the Equifax data breach, which exposed the personal data of 148 million Americans, about half- the US population, to hackers. Since the hack last year only 8% of those affected froze their credit reports, now maybe more people will be willing to take this extra step to protect themselves from identity theft.


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