In the last six months, several companies including Target and Michael’s have confessed that they suffered credit breaches. As a result, their customers’ credit data may have been obtained by hackers. Unfortunately, this type of breach is happening more and more.
Of course, for most of us, not using credit cards is not an option. Not only are credit cards convenient, but many people use them specifically to earn rewards through the credit card companies.
Ways to Protect Yourself from a Credit Breach
Moving back to a cash only society may be the best way to protect yourself from credit breaches, but for most of us, that is simply not going to happen.
Another alternative is to sign up for a credit monitoring service. However, these programs run $100 or more a year, and you only learn of a breach after it’s happened.
The best alternative may be freezing your credit.
What Happens When You Freeze Your Credit?
When you freeze your credit, no one has access to your credit report or score. If you’re at a department store and the clerk asks you if you’d like to open store credit to save 10% on your purchase, you won’t be able to do that. Because you’re credit is frozen, no one can do a credit inquiry. This means you can’t open a new line of credit while your credit is frozen, but neither can a thief.
However, you can use the credit lines you already have available without issue. A freeze does not affect your daily credit card usage in any way. (When you freeze your credit, the only way a thief can compromise your account is by using the credit lines you already have open.)
How to Freeze Your Credit
To freeze your credit, you will need to contact each of the three credit bureaus. You can freeze your credit online or by phone:
Equifax – Place a Security Freeze or 1-888-298-0045
Experian – Add a Credit Report Scoring Freeze or 1-888-397-3742
TransUnion – Place a Security Freeze or 1-888-909-8872
To freeze your credit, you will need to give some basic information such as your full name, social security number, current and most recent address, and date of birth.
IMPORTANT: When your security freeze is confirmed, you will receive a special numerical code from each credit bureau. Keep this number very safe. If you would like to thaw your credit in the future, you’ll need this number to temporarily or permanently lift the credit freeze.
Laws on freezes vary by state. For instance, I live in Illinois, and while it’s free to put a freeze in place and lift it with Experian and Equifax, I had to pay $10 when I put the freeze in place with TransUnion and another $10 anytime I thaw my credit.
However, this minimal fee costs much less than paying for credit monitoring or suffering from a credit breach.
Have you put a freeze on your credit? If not, would you consider it?
