Setup a credit agency security freeze

About 3 years ago I decided to investigate implementing a security freeze on my wife and I’s credit files at all 3 reporting agencies.   Its been long enough now that I’ve seen a lot of the benefits and disadvantages of implementing a security freeze, so I thought I would share my experiences with the process, the benefits, drawbacks, and finally brief instructions on how to go about setting up a freeze of your own.

What is a security freeze?

A security freeze on your credit file makes it impossible for anyone to view your credit.  This prevents banks from being able to determine if they can give you a loan, credit card issuers from being able to open new credit cards, etc.  With a security freeze in place, it makes no difference what personal information someone steals of yours, including your SSN.  With a freeze in place, you could post your SSN in your Web site and it would make no difference – even if someone DID steal your identity, they wouldn’t be able to open any accounts, get any loans or buy anything.

Why would someone want to implement a freeze?

Generally a freeze is utilized after someone has had their identity stolen to prevent further theft.  However, anyone can put a freeze in place at any time, and in my opinion there’s no reason you should wait until its too late.  So, 3 years ago I put freezes in place on both my wife and I’s credit files.

Advantages

Ever since implementing the security freezes on my wife and I’s files, we’ve seen a drastic drop in credit card offers and other bulk junk.  The main reason for this is if a company can’t determine that you’re eligible for them to sell their services to, they’re not going to waste postage on you.

In addition, I no longer worry about identity theft.  Granted, your identity could still be stolen and someone could still pretend to be you to access your information and/or accounts – so a security freeze isn’t a complete “Get out of jail free” card.  However, *if* someone were to steal your identity, they wouldn’t be able to open any new accounts or get any loans, so the risk is greatly reduced.

And although this is a silly advantage, it also allows you to answer anyone asking “Would you like to open a ____ account today and save $30?” with “Yes”.  The reason being, the account will be declined due to the freeze, however they’re still obligated to give you the discount even if its declined.  So you can acquire a whole new level of discounts at retailers without risking any damage to your credit.  🙂

Disadvantages

It becomes more difficult to open new credit when you really need to.  Here are some examples of times when having the security freeze in place has been a pain for me:

  1. I wanted to add a couple of additional lines to my cell phone account.  When I opened my account initially, Verizon queried my credit to see if I was eligible.  However, when I went to add a line Verizon wanted to query my credit again.  It failed, of course, and it took some explaining before they allowed the additional line.
  2. We bought a new car and decided to take advantage of the dealer’s loan rates.  Knowing ahead of time that we were most likely going to do this, I had reviewed the process for temporarily lifting the security freeze.  Yet the process was slowed by the freeze anyway, and the bank had to find someone who knew how to query TransUnion with my temporary “unlock code” which I will explain below.
  3. We refinanced our house, and to do so required a temporary unlock so the bank could check our credit again.  I knew this and unlocked our files temporarily ahead of time, but it does require additional work and cost, explained below.

In addition, there are other disadvantages that I haven’t directly been impacted by, but do exist:

  1. Utilities will query your credit when you apply to hook up gas or electricity, for example, at a new home or apartment.  The security freeze will cause these credit checks to fail and may prevent you from being able to get utilities hooked up in a timely manner.
  2. Rental agencies will query your credit when processing your application to live somewhere new.  A security freeze will cause these credit checks to fail.
  3. It is somewhat of a pain to setup and maintain.  Certain companies only query 1 agency, others query all 3.  So anytime you wish to do anything that requires a credit check, you have to work with that entity ahead of time to setup your temporary unlock, and of course incur the temporary unlock fee.  In the cases where they credit all 3, you incur 3 times the temporary unlock fee.  Or in the cases of myself and my wife, they want to query all 3 for both of us, thus 6 times the unlock fee.

So knowing all of this, I would recommend not placing a lock on your file if you aren’t fairly well established.  If you’re going to be moving or buying many things in the foreseeable future, a security freeze can add to the hassle and complexity of these activities.

In addition, if you know you’re planning to buy a car or switch phone provides, check with the company ahead of time to see if they perform a credit check (and if a credit check is required).  If they do require the credit check, check with them to find out who they query so you can create a temporary unlock with just that agency.  I would also recommend asking if they can query TransUnion, for the reasons I will outline below.

Costs & temporary unlocks

We’ve all probably seen commercials for services like LifeLock or TrustedID.  Their advertisements usually begin with somebody announcing their social security number, then explaining how they’re safe from identity theft because of the service.  Each of the 3 credit reporting agencies also offer their own similar service as well, but all of these options requires a continuous monthly fee.

Setting up your own security freeze is an acceptable (although not a complete) alternative to subscribing to one of the services, and the cost is certainly much lower.

Fee types

There are 3 different types of fees, and the actual cost varies by state depending on state law.  I’ve found this site to be a nice reference for fee amounts by state, but the basic fees are:

  1. Security freeze setup fee – a one-time fee (per credit reporting agency) to setup the freeze.  For me, this was $10 per agency – so $60 total for both my wife and I.
  2. Security freeze temporary lift – a one-time fee (per credit reporting agency you need to unlock) to temporary unlock your credit file.  For me, this is now $12 per agency per temporary unlock.
  3. Permanent security freeze lift – a one-time fee (per credit reporting agency) to permanently unlock your credit file.  For me, this is $10 per agency – so $60 total for both my wife and I.

Temporary unlocks

Temporary unlocks are handled differently by each of the 3 credit reporting agencies.  However, the general purpose of a temporary unlock is to allow access for anyone (or in certain cases just one entity) to query your credit file.  This allows you to still take out a new loan, buy a car, move, or whatever else might require your credit be available on a temporary basis.

Generally a temporary unlock opens your credit file for a set number of days, somewhere between 1 and 2 weeks in the future for up to 1 month in duration.  After the temporary unlock is over, your security freeze goes back into place automatically.

However, the area of temporary unlocks is where the agencies differ the most.  And in fact, this is where my opinion of the 3 agencies differs the most:

  1. TransUnion – by far my favorite – handles temporary unlocks very well.  You establish an account with TransUnion when you setup your freeze, then all you need to do is sign into your account to manage your freeze.  Then, they allow two temporary unlock options:
    1. Restricted temporary unlock – a unqiue code is generated which you can provide only to select entities, and only those entities who can query your credit using that code will be able to do so.
    2. Normal temporary unlock – like the others, a wide-open unlock for a specific period of time.
  2. Experian – handles temporary unlocks in an acceptable manner, but only allows “global unlocks” for a specified time, not with a code.
  3. Equifax -handles temporary unlocks in an acceptable manner, but only allows “global unlocks” for a specified time, not with a code.

One thing to note – it took awhile for the individual I was working with to acquire the auto loan to figure out how to use the TransUnion unlock code.  He actually needed to track down several other people in order to figure out how it could be done, and did complicate things a bit.

Setting up your security freeze

When I originally set up our freezes 3 years ago, the only method to do so without subscribing to their services was via snail mail.  Thankfully the 3 agencies have joined the 21st century, and today the process is much easier.  Although again I will have to hand the usability award to TransUnion for being hands-down better than the other two.

TransUnion

Bar far the easiest to setup and work with down the road.  Every time I need to temporarily unlock my credit files, I ask if the entity I’m working with can query TransUnion, and most times they work with one in particular but can query TransUnion by request.

To get started, head over to their security freeze site:

https://freeze.transunion.com

  1. Once there, create your account providing all of the required information about yourself, previous addresses, etc.
  2. When complete, you’ll be logged into “TransUnion Security Freeze” and you may now create your security freeze.
  3. After you have finished creating the freeze and paying the money, you will be provided with a PIN number that is used when unlocking your credit file temporarily or permanently.  Don’t lose this PIN.

Equifax

Equifax’s process is also acceptable, although because they have chosen not to give you an account, each time you have to provide all of your identifying information in order to perform any actions.

To get started, head over to their security freeze site:

https://www.freeze.equifax.com

  1. Enter your information to gain access
  2. Create the security freeze
  3. After you have finished, you will be provided a PIN number that is used when unlocking your credit file temporarily or permanently.  Don’t lose this PIN.

Experian

Experian’s process is my least favorite, but also works fairly well.  Similar to Equifax, you must enter all of your personal information every time you need to perform any actions.

To get started, head over to their security freeze site:

https://www.experian.com/freeze/center.html

  1. Choose “Add a security freeze”
  2. Enter your information to gain access
  3. Create the security freeze and write down your PIN.  Don’t lose this PIN.

Conclusion

Although there have been a few times in the past 3 years where I’ve cursed at this process, overall it has been very beneficial.  Of course the REAL benefit I’ll never really know about – those times when having it in place has protected my credit from harm.

And now that all three agencies have an online process for applying for and temporary lifting the security freezes, I would definitely recommend pursuing a freeze of your own.  Just be sure to read and re-read the disadvantages section above to make sure you’re clear on what you’re getting into before you start.