New Law Makes Credit Freezes and Thaws Easier – and Free

Every few months it seems we hear about another major hack of consumer information. In the wake of these massive data breaches like Equifax in 2017, which exposed the personal information of millions of Americans, a new federal law will soon allow you to get credit protection, without paying a fee.

In May, Congress passed a bill known as the Economic Growth, Regulatory Relief, and Consumer Protection Act. While the new law loosens restrictions placed on banks following the 2008 financial crisis, it also makes changes to rules regarding consumer credit protection.

When the law takes effect Sept. 21, all three major credit reporting agencies, Equifax, Experian and TransUnion will be required to set up a webpage for consumers to request fraud alerts and credit freezes. There are some differences between fraud alerts and credit freezes, so it’s important to understand those differences and what changes the new law brings to these options.

Credit Freeze

  • What is it? A credit freeze limits access to your credit file so no one, including you, can open new accounts until the freeze is lifted.
  • How does it work? To be fully protected, you must place a freeze with each of the three credit reporting agencies. Freezes can be placed by phone or online. You’ll receive a PIN to use each time you freeze or unfreeze, which may take one to three business days.
  • How long does it last? In Texas, a freeze lasts until you temporarily lift (also known as “thawing”) or permanently remove it.
  • What’s new? Currently, credit freezes usually cost around $10 to lock and unlock your account, if you are not a victim of identity theft. This must be done with all three agencies for it to be effective. These costs can add up, and although Equifax now offers free credit freezing, the other two agencies do not. With the new law, all three agencies will offer this option for free.

Fraud Alerts

  • What is it? A fraud alert requires companies to verify your identity before extending new credit. Usually that means calling you to check if you are really trying to open a new account.
  • How does it work? You contact any one of the three credit reporting agencies and that agency must notify the other two.
  • How long does it last? Currently, fraud alerts last 90 days and are free. After 90 days, you can renew your alert for an additional 90 days or as many times as you want, at no extra charge.
  • What’s new? Under the new law, initial fraud alerts will last for one year.

There is a third option called a credit lock, which is similar to a credit freeze, but offers more convenience as you can lock or unlock your account through a smartphone app. The drawback is that it is usually associated with monthly fees.

These options cover ways to protect your credit information, but data breaches can put more than just your credit score in danger. Better Business Bureau also offers advice on what to do in case you are a victim of a data breach. Visit www.BBB.org/breach for more information.

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