Few of us freeze our credit files at the three major credit bureaus (Equifax, TransUnion and Experian), even after massive data breaches like the one at Equifax. This breach compromised the private data of as many as 145 million Americans.
Gartner Research analyst Avivah Litan estimated about 2 percent to 3 percent of U.S. consumers currently have freezes on their credit. She thinks the Equifax breach disclosed on September 7 might push that to 5 percent. Meanwhile, Credit Karma saw a tenfold increase in the number of consumers freezing at least one credit report the week after the breach was announced. After increasing every day starting September 8, activity dropped off on September 15. A Credit Sesame analysis of 4.5 million TransUnion credit profiles showed as of September 25, just 0.44 percent of them had a freeze on their TransUnion report. This was an 0.8 percent increase from June.
The Reasons Why
Why don’t consumers freeze their credit files? Some may be confused about what a credit freeze does or how to put one in place. While 47 percent of Credit Sesame members surveyed said they were “extremely concerned” about their data security, 25 percent didn’t know the definition of a freeze. Others may have tried and given up when heavy traffic caused glitches at credit bureau websites after the breach.
Another disincentive may be the fee to freeze, which ranges from $3 to $10. According to advocacy group U.S. PIRG, consumers as a whole will have to shell out $4.1 billion to freeze their credit files and prevent fraudsters from using personal information possibly exposed in the Equifax breach. To ease this burden, Equifax is waiving its freeze fees until the end of January. Then it will offer a new service that will let consumers lock and unlock—an easier way to place and remove a freeze—for free and for life. Hopefully, TransUnion and Experian will follow suit.
When you freeze your credit report, you essentially stop fraudsters from opening a credit card, a mortgage or any other kind of credit account in your name. Unfortunately, you must do this one by one at the three major credit bureaus. Once this is done, a lender trying to check your creditworthiness will find the data unavailable. If it’s really you applying for credit, you’ll use a PIN to temporarily lift the freeze for the lender. In some states that’s free, but in many cases you’ll pay from $2 to $10 for the lift.
How effective is a freeze? Gartner’s Litan estimated that it will protect you from fewer than 5 percent of financial crimes to which you are vulnerable. Still, it’s better than nothing.
Perhaps another reason we don’t freeze our credit is that we are just uncomfortable without our wallet-sized enablers. Three out of four people surveyed in a CreditCards.com consumer poll said they had made an impulse purchase at some point. Of that group, 16 percent had spent $500 or more, and 10 percent had spent $1,000 or more. Keep this in mind as you begin your holiday shopping and navigate enticing sales.
Getting Credit Protection
If you want to protect your credit files, go to the websites for Equifax, TransUnion and Experian. You could also get additional information at the Federal Trade Commission’s site. If you prefer telephone, here are the numbers for the three credit bureaus:
Equifax: (800) 349-9960
Experian: (888) 397-3742
TransUnion: (888) 909-8872
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Ryan Lahti is the founder and managing principal of OrgLeader. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti
(Photo: Credit Report by Nick Youngson)