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Prevent ID Theft: 8 Tips on Credit Freezes, Locks, and Alerts

Identity theft is a growing problem, but there are ways to fight back. Laura covers eight tips for using a credit freeze, credit lock, or a fraud alert to block fraudsters from wreaking havoc in your financial life—plus, warning signs to watch for.

By
Laura Adams, MBA,
Episode #573
credit freeze, lock, or alert tips

Every year, more people become victims of identity theft, which can cost money and time to resolve. A study by Javelin Strategy & Research found that 16.7 million Americans were victims in 2017. That’s an 8% increase from the prior year and a record high.

If you worry about becoming an ID theft victim, there are ways to fight back. The nationwide credit reporting agencies—Experian, Equifax, and TransUnion—give consumers several options for restricting access to their credit data.

I’ll cover eight tips you need to know before getting a credit freeze, credit lock, or a fraud alert. Plus, you’ll learn the warning signs of identity theft so you can act quickly to block fraudsters from wreaking havoc in your financial life.

Criminals only need a few data points, such as your name, address, Social Security number, or credit card number, to steal from you.

8 Tips for Getting a Credit Freeze, Lock, or Alert to Prevent ID Theft

  1. Placing a credit freeze is now free.
  2. Freezing your credit never hurts your scores.
  3. You need three freezes for full protection.
  4. Frozen credit reports can still be accessed.
  5. Thawing your credit may take time.
  6. Credit locks are more convenient than freezes.
  7. Credit locks typically come with a fee.
  8. Fraud alerts now last longer.

Before we cover more detail on each of these credit tips, here's a quick review of what identity theft is and why thieves are after your personal data.

Why Thieves Want Your Personal Information

Here are some of the most common types of identity crime that occurred in 2017:

  • Credit card fraud is the most common type of theft, which happens when a criminal uses stolen credit card information to make fraudulent purchases. 
  • Imposter scams are when a criminal pretends to be someone you know on email, social media, or by telephone in order to get your identifying information. 
  • Mail identity theft has been around a long time and it happens when someone steals your mail or changes your mailing address in an attempt to get your sensitive information.
  • Medical identity theft happens when someone steals your insurance or personal information to obtain medical goods or services. 
  • Mortgage fraud occurs when parties involved in a home loan—such as a borrower, mortgage broker, or a real estate appraiser—give fraudulent information to get approved. 
  • Synthetic identity theft occurs when a criminal uses a combination of real and made up information to create a fake identity and apply for new credit or utility accounts and then never pay the bills.
  • Tax identity theft is when a criminal submits a bogus tax return in your name before you do, in order to get a tax refund or government benefits.
  • W-2 scams occur when a human resources administrator gets tricked into revealing sensitive payroll data.

Criminals only need a few data points, such as your name, address, Social Security number, or credit card number, to steal from you. Once they have your identifying information, they could empty your bank account, rack up charges on your credit cards, get a cell phone in your name, or even pretend to be you if they get arrested. Use these eight tips to shore up your security:

1. Placing a credit freeze is now free

While there’s no foolproof method to stay safe from ID theft, freezing your credit is the most effective way to prevent criminals from opening new credit accounts in your name. A credit freeze, also known as a security freeze, prevents a credit agency from releasing your information to anyone without your consent (with some exceptions that I’ll cover in a moment) until you unfreeze your file using a personal identification number (PIN).

A credit freeze protects you because lenders insist on reviewing your credit before approving you. If no one can access your credit, that shuts down bogus requests from thieves and cybercriminals.

While freezing and unfreezing your credit used to come with fees in many states, it’s now free due to the Economic Growth, Regulatory Relief, and Consumer Protection Act, a federal law which went into effect September 21, 2018. The credit reporting agencies must also make it convenient for consumers to request and lift freezes online.

Bonus Tip from The Penny Hoarder:

Here are easy ways to find affordable insurance. If you're looking for more tips for saving on car and health insurance, visit the Penny Hoarder website. 

For car insurance:

  1. Buy a used car
  2. Participate in your insurer’s safe-driving program
  3. Shop around for better rates

For health insurance: 

  1. Visit the federal health insurance marketplace to see whether you qualify for any discounts or assistance. 
  2. For free online help, check out Joany. It helps people find and compare plans, seek out doctors and navigate complicated medical bills.

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