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A credit freeze, also known as a credit report freeze, a credit report lock down, a credit lock down, a credit lock or a security freeze, allows an individual to control how a U.S. consumer reporting agency (also known as credit bureau: Equifax, Experian, TransUnion, Innovis) is able to sell his or her data. The credit freeze locks the data at the consumer reporting agency until an individual gives permission for the release of the data. Today, credit freezes are made possible by state laws as well as industry-initiated rules. Laws have been passed by nearly all the US states. The first state to pass a credit freeze law was California, with SB 1386 sponsored by Debra Bowen in 2003. In late 2007, all three of the major credit bureaus (following TransUnion's lead) announced that they would let consumers freeze their credit reports, regardless of the state of residency. State laws still apply, however, in instances where the cost or other details of the freeze are more favorable than they are under the industry-sponsored alternative.
Credit freezes are frequently viewed as the most effective way to prevent financial identity theft. Each year in the United States, approximately 15 percent of all cases of identity theft are cases of new account origination identity theft, according to the Federal Trade Commission. This form of identity theft occurs when a criminal opens credit in another individual's name. In the credit origination process, access to a credit report is critical for a lender to make a risk assessment. Because a credit freeze effectively stops any access to the credit report, it places a block in the process of issuing credit. Individuals who freeze their credit reports must therefore unfreeze their reports before they wish to apply for credit themselves.
Lenders typically require access to the borrower's credit report before issuing a loan in the borrower's name. If lenders cannot see the borrower's credit report, it is unlikely the lender will issue a loan in the borrower's name. Hence, credit freezing should reduce the risk that loans or credit cards will be issued fraudulently. Credit freezes do have some disadvantages, however, such as creating potential difficulties or delays applying for a loan.
In order to thoroughly freeze access to one's credit report, it is necessary to contact each of the three major credit reporting agencies. The associated fees also differ from state to state. In states where laws do not dictate more favorable pricing, the cost of freezing a credit report is $10.00 and unfreezing is similarly $10.00. In some states, credit freezing fees are waived for victims of identity theft. To avoid credit freeze fees, a law enforcement report or complaint is generally required with other documentation. Experian has an web page where ID Theft police reports or other documents can be uploaded. In late 2007, the credit bureaus started to introduce "online" credit freeze capabilities, for customers of their credit monitoring services. Here are the direct links to freeze your credit at each bureau: Equifax, Experian and TransUnion .
U.S. states without credit freeze laws
Federal Pre-Emption of State Laws
In 2018 the Economic Growth, Regulatory Relief and Consumer Protection Act, was passed which included a provision to pre-empt state laws replacing the large variation of state laws with a federal one that requires all credit freeze to be free of charge. The law goes into effect on September 21st, 2018 at which point the credit bureaus will no longer be able to charge for a freeze and a request must be completed within one business day if made online or via phone. They will have three business days to comply with a request if received via mail.
Lifting a credit freeze requires a PIN. However, in September 2017, a security vulnerability in this system was identified: the PIN is in many cases guessable, and difficult or impossible to reset.
- "How I Learned to Stop Worrying and Embrace the Security Freeze — Krebs on Security". krebsonsecurity.com.
- "Archived copy". Archived from the original on 2007-06-13. Retrieved 2007-06-01.
- "Newsroom TransUnion". newsroom.transunion.com.
- "Archived copy" (PDF). Archived from the original (PDF) on 2006-07-16. Retrieved 2006-07-22.
- "Security Freeze - Consumers Union". Consumerunion.org. 8 August 2011. Retrieved 2017-09-16.
- Missouri Security Freeze Law Archived 2008-09-01 at the Wayback Machine.
- "Alabama HB15 | 2012 | Regular Session". LegiScan. Retrieved 2016-07-07.
- "Can you join a class action suit if you use Equifax's free identity theft protection?". Theverge.com. Retrieved 2017-09-16.
- Lieber, Ron (10 September 2017). "After Equifax Breach, Here's Your Next Worry: Weak PINs". Nytimes.com.
- FTC Identity Theft Victim Complaint Data January 1 to December 31, 2005, Federal Trade Commission, Washington, DC, USA, Pg. 6 Figure 5, "How Victims' Information is Misused."
- Is freezing your credit the way to safeguard your ID?, USA Today, June 19, 2006
- State Security Freeze Laws, ConsumerUnion.org
- Credit Freeze Survey Majority of Americans are unaware of their ability to freeze their credit records, November 2007
- Map of State Security Freeze Laws, LawServer.com
- Equifax Credit Freeze Link
- Transunion Credit Freeze Link
- Experian Credit Freeze Link
- Innovis Credit Freeze Link