Credit Freeze

Thirty percent of U.S. consumers have been notified of potential compromise of their personal information in a data breach. In 2017, for the first time, more Social Security numbers were exposed than credit account numbers. Research finds that counterfeit use of credit cards is more difficult with the new microchip technology; as a result, criminals are focusing on new account creation. The number tripled in 2017 resulting in $5.1 million in losses. Now the Federal government is joining states to give consumers options to protect their credit history.

New federal legislation supports the right for individuals in all states to apply, free of charge, a credit freeze to their credit reports. The action can be taken after September 21, 2018.  By activating a freeze, you put a block on the creation of any new credit account by preventing prospective lenders from viewing your credit report. If lenders can’t confirm your capacity to repay a potential debt, they are unlikely to open an account in your name.   Iowa’s law went into effect in May.  Note: a freeze requires management; you must lift the freeze when applying for new credit.

If you are denied credit, lenders and agencies are required, by law, to send you documents informing you of your right to obtain your credit report and to dispute errors. The documents are now required to also notify you of your right to freeze your files.

In cases of identity theft, consumers have long had the option to place a fraud alert on their credit reports; the alert is a tip that this individual’s personal information was compromised, and consumers are still encouraged to pursue this action. The time frame for how long an alert is posted has been extended from 90 days to one year.  A fraud alert does not, however, block potential lenders from viewing your information; therefore it does not prevent unauthorized opening of new accounts in your name.


Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

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