This is the last in a mini-series addressing fraud alerts and security freezes under the Fair Credit Reporting Act. I introduced the topic here and then I wrote specifically about fraud alerts here. Now I want to finish-up by digging into security or credit freezes.
A security freeze placed by a consumer on his or her credit file will block many from seeing a consumer's credit file. While that may seem like a good idea, if a prospective creditor cannot see what is in the credit file, the consumer is unlikely to obtain financing while his or her file is blocked. So, if a freeze is in effect while a consumer is trying to engage in a credit transaction, the consumer will have to “lift” the block and set a date for its reinstatement. This can be a burdensome process and many consumers will be disrupted and interrupted in reestablishing the flow of credit information. Still, the interruption really is pretty minimal. Since last year, credit reporting agencies (“CRAs”) must act to lift the freeze within one hour of a proper notice.
Interestingly, under a security or credit freeze, existing creditors may still access their consumers' credit reports.
The CRAs can no longer charge a fee for placing a security freeze on one's credit file. This is similar to the free institution of a fraud alert. But, unlike placing a fraud alert on one's credit file, placing a security freeze with only one of the nationwide CRAs will not cause the others to honor the freeze. The consumer must place the freeze with each of the nationwide CRAs to gain the full benefit.
So, what's it to be—a fraud alert or a security freeze?
If I am the CSR speaking to my existing customer who is concerned about identity theft, I think that I will recommend that the customer do both—enact a fraud alert and a security freeze! Both are free. The security freeze will not deter my finance company which already has an existing customer relationship from accessing the customer's credit file. And, the requirements put on my company by the fraud alert are easily addressed as I already know my customer.
What I will not do is advise the customer to pay a CRA for a “credit lock.” A credit lock is a proprietary program for which the CRAs charge consumers. Since the law has now developed in such a consumer friendly fashion for instituting both fraud alerts and security freezes, there is no reason for a consumer to pay a CRA for a credit lock fee for essentially, what the consumer may get for free.
And, that's all I've got to say about that, Forrest!