The Guide to Freezing and Thawing Your Credit Report

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The recent Equifax data breach that exposed the names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers of about 44 percent of the current American population has many consumers now rushing to freeze their credit scores. However, many consumers may not grasp what that really entails.

In a recent survey by CompareCards.com, a subsidiary of MagnifyMoney’s parent company, LendingTree.com, 78 percent of respondents said they had never put a freeze on their credit reports.

When you freeze and thaw your report, you are preventing anyone else from opening a credit account under your name without your knowledge. It’s a smart way to defend yourself against some cases of identity theft. Massive data breaches like the one that hit Equifax are stark reminders of the importance of protecting sensitive information from potential fraudsters, but that doesn’t mean you should wait until your information is compromised in a data breach to act.

“We should all be vigilant,” says Eva Velasquez, president of the Identity Theft Resource Center. “Being vigilant about your identity is just a part of the world that we live in. If being involved in a data breach is the catalyst that brings that to the top of your mind, then we can see that as a positive.”

What a credit freeze does — and doesn’t — accomplish

A credit freeze, or security freeze, is a tool consumers can use to restrict access to their credit reports. The freeze makes it harder for criminals to commit financial fraud using your information.

The freeze seals your credit reports so that new requests won’t be processed without your approval. You will need to use a personal identification number — only you will know it — to lift or thaw the freeze before creditors can again have access to your credit report. A freeze adds a layer of security, since most creditors won’t extend new credit without seeing your report.

You will need to request a credit freeze with each of the big three reporting bureaus — Equifax, TransUnion and Experian — for the freeze to have the biggest impact.

Freezing your credit report will NOT:

  • Impact your credit score
    • A credit freeze will have no impact whatsoever on your credit score. Freezing your credit will neither raise nor lower your score.
  • Restrict existing creditors’ access to your report
    • Your current creditors, government agencies or debt collectors acting on behalf of those parties will still have access to your credit report if you freeze it.
  • Keep you from opening new credit
    • You will still be able to use your credit report to do things like open a new credit account, apply for a mortgage, rent an apartment or take any other action that calls for a credit check. But you’ll need to lift the temporary freeze before lenders can gain access to the report. If you know you’ll be doing any of those activities, you can temporarily lift the freeze for a certain party or a length of time, but it may cost you money to do so.
  • Prevent a criminal from committing fraud involving your existing accounts.
    • Freezing your credit report won’t prevent you, or any would-be thieves, from using your existing credit accounts. You will still need to vigilantly monitor all of your personal bank, credit and insurance accounts for fraudulent transactions or other signs of fraudulent activity.
  • Stop you from receiving prescreened credit offers
    • Freezing your credit report won’t stop lenders from sending you prescreened credit offers, as they prequalify new customers using a “soft pull.” A soft pull doesn’t show up on your credit report or harm your credit score. Banks buy the names of people who meet their credit criteria from credit bureaus to create their prequalification lists. So when you are prequalified, it just means you’re on a list somewhere. If you want to stop receiving such credit offers, call 888-5OPTOUT (888-567-8688) or ask to be excluded here.
  • Protect you from all forms of ID theft
    • A credit freeze can help to prevent financial fraud, but it will still leave you vulnerable to many other kinds of fraud. When criminals obtain important and sensitive information like your Social Security number as they did in the Equifax breach, they can use this data to commit criminal, medical, tax and employment theft, too. For example, a thief could use your Social Security number to file a tax return and claim a fraudulent refund, or use your personal information to obtain medical care or employment without your knowledge. Remain vigilant to protect yourself from other forms of fraud. Pay careful attention to any mail or phone calls from a medical office, government agency or other entity. They may be reaching out to verify your identity or report that someone else is attempting to commit fraud in your name.

How to freeze your credit report

You must go through a separate process with each of the three major credit bureaus to freeze your credit report.

Equifax

Equifax Complete Advantage Plan You can freeze your Equifax credit report online, by phone or by mail.

  • Online: In a statement issued in The Wall Street Journal on Sept. 27, Equifax said it would offer a new service that permanently allows consumers to lock and unlock their credit reports for free. The service is set to debut by Jan. 31, 2018.

    In the meantime, you can still freeze your Equifax score the traditional way, by visiting the Equifax security freeze site. You will first need to fill out a form with your personal information, then make any payment required by your state. Equifax’s site may be experiencing high traffic as a result of the recent breach, so it may not be able to process your request right away. If that is the case, try one of the other methods or try again online in a day or two.

  • Phone: Call 1-800-685-1111 (New York residents call 1-800-349-9960), and you should be connected with an Equifax representative who will verify your personal information and assist you with your credit freeze request.
  • Mail: Request your credit freeze by certified mail. If you’re a victim of identity theft, this is the channel you will need to use; your request must be submitted in writing with relevant documents, like a police report or other documented proof of theft, to have your fee waived. Write a letter to the reporting agency requesting the credit request and send it to the following address: Equifax Security Freeze/P.O. Box 105788/Atlanta, GA 30348

TransUnion

TrueIdentity You can freeze your credit TransUnion report online, by phone or mail, or by using TrueIdentity,

  • Online: Go to the TransUnion security freeze site. You will need to log in or create a TransUnion account before you can submit your request online.
  • Phone: Call 1-888-909-8872 and a TransUnion representative should verify your personal information and assist you with your credit freeze request.
  • Mail: Request your credit freeze by certified mail. Write a letter to the reporting agency requesting the credit request and send it to the following address: TransUnion LLC/P.O. Box 2000/Chester, PA 19016
  • TrueIdentity: TransUnion offers a free credit report monitoring service called TrueIdentity. The service allows users to lock and unlock their credit report with a swipe on their mobile device or a click online. It gives access to unlimited TransUnion Credit report refreshes, and alerts you if an entity pulls your TransUnion credit report.

Experian

Experian You can freeze your Equifax credit report online, by phone or by mail.

  • Online: Go to the Experian security freeze site. Select “add a security freeze,” then “apply online” and you’ll be redirected to a form requesting your personal information. Submit the form and make any payment required by your state to freeze your report.
  • Phone: 1-888-EXPERIAN (1-888-397-3742). Press 2 to be guided through prompts to request a security freeze.
  • Mail: Request your credit freeze by certified mail. Write a letter to Experian requesting the credit request and send it to the following address: Experian Security Freeze/P.O. Box 9554/Allen, TX 75013

How to thaw your credit report with each agency

Equifax

You can temporarily thaw your Equifax credit report via mail, online via Equifax’s security freeze site, or by calling 1-800-685-1111. (New York residents dial 1-800-349-9960.) Send mailed requests to the following address:
Equifax Security Freeze/P.O. Box 105788/Atlanta, GA 30348

TransUnion

You can temporarily thaw your TransUnion credit freeze by mail, online or via TransUnion’s credit freeze site, or by calling 1-888-909-8872. Send mailed requests to the following address: TransUnion LLC/P.O. Box 2000/Chester, PA 19016

Experian

You can temporarily thaw your Experian credit report by mail, online via Experian’s security freeze site, or by calling 1-888-397-3742. Send mailed requests to the following address:
Experian/P.O. Box 9554/Allen, TX. 75013

How much a credit freeze will cost you — by state

The protection isn’t free. Each time you freeze your report, temporarily lift a freeze or permanently end one, you may have to pay a fee. In the wake of the Equifax hack, consumer advocacy groups and some lawmakers have renewed their efforts to allow data breach victims to sign up for free credit freezes in their states.

“It is outrageous that the credit bureaus charge us fees to prevent identity theft when we didn’t even give them permission to collect our information in the first place,” Mike Litt, a consumer program advocate with the U.S. Public Interest Research Group, said in a statement a little over a week after the Equifax data breach was made public.

Sens. Elizabeth Warren (D-Mass.) and Brian Schatz (D-Hawaii) introduced the Freedom from Equifax Exploitation (FREE) Act on the same day. The act is intended to make actions related to freezing credit reports free for all consumers nationwide.

Until the proposed act wends its way through both houses of Congress, the amount you may pay to freeze, thaw or permanently end a credit freeze will vary from state to state and may be up to $10.

There is a silver lining for some. If you can present documentation showing you are a victim of identity theft at the time you place a freeze on your credit, most states will waive fees.

You can check what your state will charge you for each action below. Multiply the amount by three because you will need to pay each credit bureau.

In a Sept. 15, 2017, statement addressing the recent breach, Equifax said it would waive security freeze fees for all consumers through Nov. 21 and refund those who have paid to place or remove a credit freeze since 5 p.m. on Sept. 7, just after the breach was announced.

Nearly every state has legally identified definitions of a “protected consumer,” which may be a minor, an elderly citizen, a service member, a spouse of a victim of ID theft, a medically incapacitated person or some other distinction. Depending on the state, a protected consumer may pay a different amount or have his or her fee waived. The National Conference of State Legislators has more information on whom each state counts as a protected consumer, here.

State

Consumer Category

Freeze

Thaw

End Freeze

Alabama

Victim of ID theft

free

free

free

Senior (65+)

free

$10

$10

All other consumers

$10

$10

$10

Alaska

Victim of ID theft

free

free

free

All other consumers

$5

$2

free

Arizona

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

$5

$5

$5

Arkansas

Victim of ID theft

free

free

free

Senior (65+)

free

$5

free

All other consumers

$5

$5

$5

California

Protected Consumer

$10

n/a

$10

Minor <16

free

n/a

free

Senior (65+)

$5

$5

$5

All other consumers

$10

$10

$10

Colorado

Victim of ID theft

free

free

free

All other consumers

free

$10

$10

Connecticut

Victim of ID theft

free

free

free

Protected Consumer

free

free

free

All other consumers

$10

$10

$10

Delaware

Victim of ID theft

free

free

free

Protected Consumer

free

free

free

Senior (65+)

$5

free

free

All other consumers

$10

free

free

District of Columbia

Victim of ID theft

free

free

free

All other consumers

$10.00

free

free

Florida

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

Senior (65+)

free

$10

free

All other consumers

$10

$10

$10

Georgia

Victim of ID theft

free

free

free

Minor < 16

free

n/a

free

Senior (65+)

free

$3

$3

All other consumers

$3

$3

$3

Guam

Victim of ID theft

free

free

free

All other consumers

$10

$10

$10

Hawaii

Victim of ID theft

free

free

free

All other consumers

$5

$5

$5

Idaho

Victim of ID theft

free

free

free

All other consumers

$6

$6

$6

Illinois

Victim of ID theft

free

free

free

Minor < 18

$10

n/a

$10

Senior (65+)

free

$10

free

Active duty military member

free

free

free

All other consumers

$10

$10

$10

Indiana

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

free

free

free

Iowa

Victim of ID theft

free

free

free

All other consumers

$10

$12

$12

Kansas

Victim of ID theft

free

free

free

All other consumers

$5

$5

$5

Kentucky**

Victim of ID theft

free

free

free

All other consumers

$10

$10

$10

Louisiana

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

Senior (62+)

free

free

free

All other consumers

$10

$8

free

Maine

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

free

free

free

Maryland

Victim of ID theft

free

free

free

Minor < 16

$5

n/a

$5

All other consumers

$5

$5

$5

Massachusetts

Victim of ID theft

free

free

free

Protected Consumer

free

free

free

All other consumers

$5

$5

$5

Michigan

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

$10

$10

$10

Minnesota

Victim of ID theft

free

free

free

All other consumers

$5

$5

$5

Mississippi

Victim of ID theft

$10

free

free

All other consumers

$10

$10

$10

Missouri

Victim of ID theft

free

free

free

All other consumers

$5

$5

free

Montana

Victim of ID theft

free

free

free

All other consumers

$3

$3

free

Nebraska

Victim of ID theft

free

free

free

Minor < 16

free

n/a

free

All other consumers

$3

$3

free

Nevada

Victim of ID theft

free

free

free

Senior (65+)

free

free

free

All other consumers

$10

$10

$10

New Hampshire

Victim of ID theft

free

free

free

All other consumers

$10

$10

$10

New Jersey

Victim of ID theft

free

$5

$5

All other consumers

free

$5

$5

New Mexico

Victim of ID theft

free

free

free

Senior (65+)

free

free

free

All other consumers

$10

$5

$5

New York

Victim of ID theft

free

free

free

Protected Consumer

free

free

free

All other consumers

free

$5

$5

North Carolina

Victim of ID theft

free

free

free

Spouse of ID Theft Victim

free

free

free

Minor < 16

$5

n/a

$5

Senior (62+)

free

free

free

All other consumers

free

free

free

North Dakota

Victim of ID theft

free

free

free

All other consumers

$5

$5

free

Ohio

Victim of ID theft

free

free

free

All other consumers

$5

$5

$5

Oklahoma

Victim of ID theft

free

free

free

Senior (65+)

free

$10

free

All other consumers

$10

$10

$10

Oregon

Victim of ID theft

free

free

free

Minor < 16

free

n/a

free

All other consumers

$10

$10

$10

Pennsylvania**

Victim of ID theft

free

free

free

Senior (65+)

free

$10

free

All other consumers

$10

$10

free

Puerto Rico

Victim of ID theft

free

free

free

Senior (65+)

free

$10

free

All other consumers

$10

$10

$10

Rhode Island

Victim of ID theft

free

free

free

Senior (65+)

free

free

free

All other consumers

$10

$10

$10

South Carolina

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

free

free

free

South Dakota**

Victim of ID theft

free

free

free

Minor < 16

$5

n/a

$5

All other consumers

$10

$10

$10

Tennessee

Victim of ID theft

free

free

free

Minor < 16

$10

n/a

$10

All other consumers

$7.50

free

$5

Texas

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

$10

$10

$10

Utah

Victim of ID theft

free

free

free

Minor < 16

free

n/a

free

All other consumers

$10

$10

free

Vermont

Victim of ID theft

free

free

free

All other consumers

$10

$5

$5

Virgin Islands

Victim of ID theft

free

free

free

All other consumers

$10

$10

$10

Virginia

Victim of ID theft

free

free

free

Protected Consumer

free

n/a

free

All other consumers

$10

free

free

Washington

Victim of ID theft

free

free

free

Senior (65+)

free

free

free

All other consumers

$10

$10

$10

West Virginia

Victim of ID theft

free

free

free

All other consumers

$5

$5

$5

Wisconsin

Victim of ID theft

free

free

free

Minor < 16

free

n/a

free

Medically incapacitated and not an ID theft victim

$10

n/a

$10

All other consumers

$10

free

free

Wyoming

Victim of ID theft

free

free

free

All other consumers

$10

$10

$10

Sources: Consumersunion.org Transunion.com NCSL.org

When a credit freeze makes sense — and when it doesn’t

You should freeze your credit report when you are in danger of financial or identity fraud.

Eva Velasquez, of the Identity Theft Resource Center, says consumers should consider freezing their reports if they are victims of identity theft or at an increased risk of having their information misused for identity theft because of lost or stolen items.

Consumers might also consider a credit freeze “if their personal information, specifically their Social Security number, is compromised in some way, like in that of a data breach,” says Velasquez.

Freezing your report is an important consumer protection you can and sometimes should take advantage of as a general consumer. However, there are several occasions when you may not want to freeze your credit.

  • You are planning to open a new line of credit (credit card, mortgage, etc.) in the near future.
  • You work for a company that requires a regular background check or access to your credit report.
  • You regularly open new accounts with financial institutions.

Ultimately, if you are not in danger of ID theft, the decision to freeze or unfreeze your credit report depends on whether or not you’re willing to go through the inconvenience and cost of unfreezing and refreezing each time an entity you approve of wants access to your credit report. If you want a more convenient way to monitor use of your credit report, you may want to consider placement of a credit fraud alert instead of the freeze, as explained below.

Pros and cons of freezing your credit report

Pros:

  • Locks your credit report
    The most obvious benefit you’d get from freezing all of your credit reports is an additional layer of protection. Only you can permit a lender or other entity to receive your full, detailed credit report. You’ll have the opportunity to verify a request’s legitimacy before anyone can obtain your report.
  • No impact on your credit score
    Neither freezing nor thawing your credit report will affect your credit score. Your credit score is impacted by positive or negative activity on your end. Adding protection is considered a neutral action.
  • Generally free for ID theft victims
    If you’re a victim of ID theft, you won’t be required to pay any fees to freeze, thaw or lift a freeze on your credit report in most states. However, you may need to provide additional documentation proving the theft and submit your request in writing.

Cons:

  • Need to plan before opening a credit line
    The added protection comes with the added inconvenience of freezing, or thawing your credit report when you need to apply for credit. This will take just a bit of forethought and may cost you up to $10 each time you thaw your report. You may take several minutes to complete thaw requests for all three bureaus online, which will make it a little more difficult to apply for a credit card in the checkout line. You can manually refreeze your accounts or set your request to automatically do so on a certain date.
  • Fees, unless you’re a victim of ID theft
    Each action — freezing or lifting a freeze — may cost you $3 to $10 in many states. The cost is often tripled, as it’s necessary to freeze or thaw all three of your credit reports if you are unsure which bureau the entity requesting your report will use. The cost may be high for some consumers. Freeze and thaw your reports wisely, and ask the requesting entity which bureau it uses to avoid paying unnecessary fees whenever you can.

An alternative to freezing your credit report

If you don’t think you are in immediate danger of ID theft, you can opt for less-drastic protection and set up a credit fraud alert with all three bureaus instead. When you have the alert set, all lenders attempting to pull your credit history will see a flag on the reports, alerting them to verify your identity before extending credit.

The entity is not required to go through additional verification, but the warning puts it at that entity’s discretion. You will still be able to apply for credit whenever you’d like, and won’t need to remember a PIN to unlock your credit report.

Additionally, fraud alerts are temporary. In most cases, you will be required to renew the alert in 90 days.

The post The Guide to Freezing and Thawing Your Credit Report appeared first on MagnifyMoney.

Here’s How Many People Actually Have the Worst Credit Score

It is possible to have a rock-bottom credit score. Find out exactly how many U.S. residents meet this dubious threshold.

As confusing as credit scores can be, most people get the basic concept: You want a high score, not a low one. What qualifies as a good credit score depends on the scoring model you’re talking about (and there are dozens of them), but a common range is 300 to 850. The higher your score, the better. You don’t have to aim for an 850 to get the best terms on a loan or qualify for top-tier credit cards, but anywhere in the high 700s is a good place to be.

Ideally, you’re not anywhere near the bottom of the range, but it is possible to have a 300 credit score on a 300 to 850 scale. The good news: A very small portion of the population has such a score. The bad news: Some people do.

How Many People Have the Worst Credit Score?

There are 294 million “scoreable” consumers, and only 0.01% of them had a 300 credit score, according to data credit bureau TransUnion pulled for Credit.com in March 2017. (A scoreable consumer is someone with enough information in their credit files to generate a VantageScore 3.0. TransUnion said 4.28% of the population is not scoreable.) While 0.01% is a really small portion of consumers, it still means 29,400 people have the worst credit score (on the VantageScore 3.0 scale). In other words: It’s totally possible for your credit to hit rock-bottom. (You can see where you stand by getting two of your credit scores for free on Credit.com.)

 

Though it’s uncommon to have the worst credit score, having bad credit isn’t. More than a quarter (27.66%) of consumers have a credit score between 300 and 600, which is considered bad credit or subprime credit. Conversely, 20% have a super prime credit score (781 to 850). The average credit score was 645 when TransUnion pulled the data.

How to Deal With Terrible Credit

TransUnion didn’t identify common factors among consumers with a 300 credit score, but they pointed out some characteristics of subprime credit files: “Generally speaking people with poor credit (300-600 score) usually make late payments, only contribute the minimum amount, carry high percentage balances on multiple cards and apply for multiple lines of credit within a short period of time,” said Sarah Kossek, a spokeswoman for TransUnion, noting that the factors vary by individual.

So if you want to avoid joining the population of people with bad credit (or you want to get out of the club), it’s smart to make credit card and loan payments on time, pay down your debts, use a very small portion of your credit card limits and apply for credit sparingly. It’s also a good idea to regularly review your credit reports for accuracy, as errors may be hurting your credit. You can pull your credit reports for free each year at AnnualCreditReport.com.

If your credit is the worst, figuratively or literally, well, you can find a full explainer on how to fix it right here.

Image: mikkelwilliam

The post Here’s How Many People Actually Have the Worst Credit Score appeared first on Credit.com.