A recent study published by Javelin Research and Strategy found that nearly 17 million Americans were victims of identity theft in 2017. However, thanks to recent legislation signed into law in May, consumers may now take additional steps toward keeping their credit safe.
The legislation, which went into effect September 21st, allows consumers to take advantage of placing a credit freeze on their files at no charge, a process which previously cost up to $20. The practice of freezing a credit file essentially restricts access to a consumer’s credit report, preventing identity thieves from opening new accounts in his or her name. The same law includes additional safety measures which enable parents to freeze credit on any children under the age of 16.
In fact, in the past year alone, one million children have fallen victim to identity theft- most of them under the age of eight. “Of course, this activity can be extremely harmful in the short term, but some of the direct consequences are not realized until a child applies for their first line of credit several years down the road,” says credit expert Jacqueline Drziak. This is why, in today’s environment, choosing to freeze your child’s credit could be the difference between safety and data compromise.
The concept of freezing a credit file has been available for years but has become the primary topic of discussion more recently in the aftermath of the Equifax breach of security in 2017. That breach in particular generated lots of media attention due to the large number of consumers impacted and the nature of the data compromised. For the last 12 months, there has been a flurry of dialogue surrounding the best approaches for consumers to protect themselves against hacker attacks and stolen identities. There have been many suggestions put forth by both government and the private sector. Many of the suggestions have referenced “freezing” or “locking” your credit history.
Credit Freeze vs. Credit Lock
According to Drziak, credit freezes and credit locks are similar, but there are key differences which make each acceptable in certain situations. “If you feel your credit report and personal information has been breached, you should consider freezing your credit on all three bureaus. It’s free by federal law, and is essential to fully securing your data,” Drziak says.
A credit lock, by contrast, serves better as a precautionary measure to prevent fraud in the first place. Credit locks are also free on the Transunion and Equifax bureaus, and are useful because they enable lenders to access and then immediately lock the report again if the consumer wishes to apply for new credit (mortgages, car loans, etc.)
Of course, the concept of identity theft can be frightening, and there’s no guarantee that a large scale data compromise won’t happen again. But with the major breach behind us, lawmakers have provided us with the tools and strategies to better protect ourselves. Thanks to these legislative actions, you now have more power to keep yourself – and your children – safe.