Many experts agree that freezing your credit report is the strongest way to protect against identity theft.
Starting today, you'll be able to do it free of charge.
In the wake of a massive data breach last year at Equifax that exposed personal information for about 148 million Americans, Congress amended the Fair Credit Reporting Act to require reporting agencies to freeze reports for no charge. Equifax is one of the three major credit reporting agencies in the United States.
Identity thieves can use information in your credit report to open credit cards and bank accounts, and take out loans.
But a credit freeze restricts your credit report so that it can't be accessed by a new lender. If a lender can't see your credit report, they won't issue a new account in your name.
Credit card companies and banks where you have existing accounts will still be able to check your credit report. But you will have to temporarily lift the freeze if you want to open a new line of credit.
Before today, both freezing and unfreezing could cost money. Most security freezes cost between $2 and $10.
Some states had already required credit agencies to lift the charge, but the new law makes placing, lifting, and permanently removing freezes free no matter where you live.
A credit rating agency now must put the freeze in place within one business day if made online or over the phone, and within three business days if requested by mail. It has one hour after you request a lift on the freeze, though it could take just minutes, according to consumer advocacy group US PIRG.
But the time could add up. You must contact each of the three big credit rating agencies — Equifax, Experian, and TransUnion — separately to freeze and unfreeze your reports. Consumers are given a PIN that they will need to lift or remove the freeze in the future.
"A credit freeze may not be the best thing to do if you're applying for a home or auto loan, or looking for different types of credit cards," said John Heath, directing attorney at Lexington Law, which specializes in credit repair services.
If you might require a new line of credit soon, signing up for fraud alerts might be a better option, he said.
Credit reporting agencies and other companies like Credit Karma, for example, offer a variety of credit monitoring and fraud alert products, sometimes for a fee. Those services will alert you of suspicious activity after it happens but stop short of restricting access to your credit report.
While a fraud alert offers less protection, it does allow a consumer to open a new account without having to lift a freeze. Usually contacting just one of the agencies will put a fraud alert on credit reports at all three.
"A freeze is a bit more time consuming and not as convenient as a fraud alert product. But it's certainly necessary if you have been a victim or suspect that you've been a victim of identity theft," Heath said.
Consumers still have access to their credit reports without having to lift the freeze. Under law, you can access your report for free once a year from each credit rating agency. A freeze won't affect your credit score and won't stop companies from sending you pre-approved offers, unless you take action to opt out.
The new law also specifies that freezing your child's credit report is free, too. Children can be valuable targets for identity thieves because the thieves can launch a credit file from scratch. Generally, a credit report isn't activated until someone applies for credit.
Some also offer a product called a "credit lock."
Those usually work in a similar way to credit freezes, but there may be a charge. The company may also be able to use your information to sign you up for the product for marketing purposes, US PIRG said.
