'Tis the season for lots of credit card use. During this time, thieves may lurk, making you the victim of identity theft.
A NerdWallet survey found that just 10% of Americans froze their credit files after the infamous Equifax breach that occurred in May 2017. However, credit freezes offer one of the most effective ways to prevent financial identity theft.
You can freeze your files at the big three credit reporting agencies — Equifax, Experian and TransUnion — for free, but does this action make sense for everyone? Let's find out.
Why Freeze Your Credit?
Anyone can freeze their credit, even if their identity has not been stolen. Freezing your credit stops thieves from creating new accounts using your personal information.
However, it's important to consider all the angles before you decide to get an official credit freeze. A freeze means that banks, lenders and credit card companies will deny any application or request that comes through with your name on it — including requests you make.
For example, let’s say that you freeze your credit and a scammer attempts to use your Social Security number to apply for a new credit card. The credit card company would process the application and request to view your credit report. Each credit bureau would deny the request because you've frozen your account. The credit card company would then reject the application because it can’t verify your credit score.
This means that your bank will deny the application even if you submit a legitimate request for a new loan.
Unfortunately, you can't get around criminals using your data in ways that don’t require a credit check. For example, if a thief has access to your credit card, it wouldn't stop the thief from making purchases.
A credit freeze does not impact your current financial relationships, such as with your credit card accounts, loans or your mortgage.
Let's walk through the simple steps you can take to get a credit freeze.
Step 1: Contact each credit reporting bureau.
Each of the three credit monitoring agencies offer free credit freezes and unfreezes at your request. You must contact each bureau individually to freeze your credit, and you must contact all three — just contacting one of the bureaus will leave your account vulnerable. Most credit freezes won't take you tons of time when done online or over the phone. Here is the contact information for the three bureaus:
Keep in mind that after a data breach or widespread hack, you might have trouble getting through to a representative. You may have to request digital forms more than one time to get through during busy periods.
Step 2: Answer bureau verification questions.
Each credit bureau must verify your identity before it can freeze your credit. The bureau will ask you a series of questions about your identity and credit you’ve used in the past. For example, they may ask about a series of credit items and you must choose the item that's actually on your credit report.
Give each credit bureau your personal information upon request. This may include your name, address, date of birth, Social Security number and other personal information.
After the bureau verifies your identity, it’ll give you a PIN that you can use to freeze and unfreeze your credit. You’ll need to re-verify your identity if you forget your PIN, so keep your PIN secure but accessible.
Step 3: Request the credit freeze.
You can freeze and unfreeze your credit on your own through your account. You can also temporarily unfreeze your credit if you’re applying for a job or a loan. If you want to unfreeze your credit after freezing it over the phone, you’ll need to call again to unfreeze it or create an online profile.
Keep in mind that freezing and unfreezing your credit doesn't occur instantly. It might take a few days to go into effect.
When You Should Consider Freezing Your Credit
When should you freeze your credit? Consider freezing your credit if:
- You think you’ve been the victim of identity theft. Has a thief stolen your identity to open new accounts? You may want to seriously consider freezing your credit.
- A data hack or breach has occurred. Any company can get hacked — your credit card at a major retailer, your insurance company, your credit card company, etc. The company will notify you of a hack and you can freeze your credit afterward.
- A thief steals your credit card number. Unfortunately, you can't stop a thief by freezing your credit if the thief already has your credit card number. However, a thief might find it easy to gain access to other sensitive information. Be safe and freeze your credit as soon as you encounter a stolen credit card.
- Your credit monitoring service alerts you to potential identity theft. Credit monitoring services always scan for unusual credit activity. Freeze your credit if your credit monitoring service alerts you to suspicious activity.
When You Shouldn’t Consider Freezing Your Credit
You should always have a good reason to freeze your credit, though you shouldn't do it under these circumstances:
- Right before you apply for more credit: It takes a while to "thaw" your credit. You’re better off leaving your credit visible in case you're in a situation where a credit check will occur.
- When no data hack or threat occurs: You may feel tempted to keep your credit frozen all the time until you need to apply for a loan. However, this tactic could backfire on you because you might lose out on a loan or job opportunity if you forget to unfreeze your credit.
How Do You Unfreeze Your Credit?
You can unfreeze your credit by contacting each individual credit reporting bureau. Enter your PINs on each online account and request to unfreeze your credit. You can choose between a temporary lift or permanent removal:
- Temporary lift: A temporary lift allows inquiries to pass through for a specific amount of time. Once that period of time passes, your credit report automatically freezes again until you ask for another lift.
- Permanent removal: Permanent removal means your credit report stays unfrozen. However, you can always ask for another freeze at any time in the future — it's not actually permanent.
By law, each reporting agency has up to three business days to fully unfreeze your credit, so make sure you plan ahead.
In this Busy Season, Protect Your Finances
When a company you trust suffers a breach, don't let it ruin your credit history, hurt your job prospects and even increase your insurance premiums. It's kind of like an extreme version of risk tolerance. Except in this case, you don't want to invite this kind of risk to your finances.
Knowing how and when to freeze your credit gives you a tool to keep up with your overall financial health. It's also a good idea to keep track of your credit score, check your credit report at annualcreditreport.com (for free once per year) and stay on top of reporting errors. 7 Precious Metals Stocks That Will Offset the Effects of Inflation
There’s no getting around it. Inflation is going to be an unwelcome guest at our holiday gatherings this year. Estimates say this will be the most expensive Thanksgiving dinner in years. The Consumer Price Index (CPI) jumped 6.2% in October. That was the biggest surge in 30 years.
But the latest inflation data only confirmed what investors already knew. At least the ones that put gas in their cars or buy groceries. And yet, Washington continues to advocate even more spending. The latest “skinny” infrastructure bill will still pump over $1 trillion (that’s trillion with a “T”) into the economy. Even economists who would usually be favorably disposed to the current administration acknowledge that this will only cause inflation to increase.
That means it’s a good time to consider investing in precious metals which are considered to be safe-haven assets and a hedge against inflation. But that’s not the only reason to consider precious metals. You can also get some nice growth. Gold, for example, is up more than 300% in the past 15 years. And we would certainly advocate that you consider owning a bit of physical metals if you can.
However, buying precious metals stocks gives you exposure to many mining companies. As the spot price for the metals rises, it becomes more profitable for these companies to run their mining operations.
View the "7 Precious Metals Stocks That Will Offset the Effects of Inflation"