Report: Consumer Protection

Why You Should Get a Security Freeze BEFORE Your Information is Stolen

Tips To Protect Yourself Against Identity Theft & Financial Fraud
Released by: Illinois PIRG Education Fund

The first defense against any kind of identity theft is to be vigilant about protecting your personal information by taking steps like creating secure passwords, installing anti-virus and
anti-malware software, and shredding personal documents. However, if and when someone does steal enough of your information to commit identity theft, there is really only one type that you can stopbefore it happens: New account identity theft, where someone opens a new account in your name. All other types of identity theft and fraud, at best, can only be detected after the fact.
Unfortunately, the services and steps that are most offered and recommended to consumers are the ones that only detect identity theft or fraud but don’t stop it.

Whether your personal information has been stolen or not, your best protection against someone opening new credit accounts in your name is the security freeze (also known as the credit freeze), not the often-offered, under-achieving credit monitoring. Paid credit monitoring services in particular are not necessary because federal law requires each of the three major credit bureaus to provide a free credit report every year to all customers who request one. You can use those free reports as a form of do-it-yourself credit monitoring.

Credit monitoring only lets you know after someone has opened a new account in your name. A security freeze, on the other hand, prevents new accounts from being opened in the first place. How does a security freeze prevent new accounts from being opened? It works by blocking your credit report from being shared with potential new creditors, such as banks or credit card companies. Most creditors will not issue new credit to a customer if they cannot see that customer’s credit report or score derived from it from at least one of the three major national credit bureaus. So if a thief applies for a new account in your name with your Social Security number and his or her own address, but your credit report is frozen, creditors will simply not open a new account. That’s why a security freeze offers peace of mind and is the only way to prevent someone from opening a new account in your name.

So, the best course of action for most consumers is to place security freezes with the three major credit bureaus. Consumers in every state can choose to have their credit reports frozen until they want to apply for credit, at which time they can easily unfreeze or “thaw” their reports by lifting their freezes. Consumers who choose a security freeze should account for the time it can take to thaw their reports if they want to apply for credit in the future. In most cases if you request a thaw online or over the phone, your report can be unfrozen within 15 minutes. However, it can take longer if you don’t have your PIN number that was assigned to you when you froze your report. By law, credit bureaus have up to three days of receipt of your request to lift a freeze.

This report explores the best options you have against new account identity theft, walks you through freezing and unfreezing your credit reports and explains defenses against other types of identity theft.

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