Freeze Your Credit Files, Lock Your Doors
Last week on the blog we talked about the recent data hacks and how to best protect yourself. This week I want to talk about the best strategy for protecting your personal information: Freezing your credit file.
I previously gave an analogy that I’ll repeat for those who missed it.
I do a lot to protect my home. Lights are on all night. The house alarm is active. We don’t leave valuables outside. I have a gun ready for self protection. And I have a dog. I used to have a good guard dog, but now I just have the kind that’s everyone’s friend and would gladly welcome any intruder.
Out of all these strategies to protect my home, the best one is to lock my doors! This sounds obvious and simple, but not everyone does it. When thinking about my house alarm, it’s great to be alerted that someone just broke into my house. But, I would rather them never get past the locked door.
Freezing your credit file is kind of like locking the door to your financial information.
Your financial information is primarily stored in your credit file. Your credit file is essentially information on your credit accounts and your payment history. There are three main companies (bureaus) that keep information on your credit file: Equifax, Experian, and Transunion. Each of these companies assigns a credit-worthiness score to you based on the information in your credit file. This score is sometimes called your FICO score.
If you want to borrow money for any reason, the lender is going to first contact at least one of these credit bureaus to determine your credit worthiness. And this is the door that you can lock.
Many times criminals will try to steal from you by “borrowing” your identity. They’ll open a credit card pretending to be you, spend as much as they want on the card, and not pay it back.
If you freeze (or “lock”) your credit file, you are telling the three credit bureaus that you are not looking to borrow money or open new lines of credit in the near future. They give you an additional PIN or password in order to open your file in case you need it in the future.
This time when the criminal tries to open that credit card in your name, the credit card company is going to deny the request because your credit file is frozen and they can’t access your information. If they can’t look up your credit file, they will not extend credit.
It really is as simple as it sounds.
If you want to freeze your credit file, you need to do it with all three credit bureaus. Here are the links where you can do this online:
This used to cost 5 or 10 dollars and be a bit of a hassle. Now it is easy and free to everyone.
Often clients will ask me what they should do if they end up needing to access their credit file again. It’s easy! You can thaw (or “unlock”) your credit file temporarily while you need it. Just go to the same websites linked above.
If you have questions about your credit file, or other ways to protect yourself from financial fraud, reach out to me! I’d love to help.
