The Big Take: How to Protect Yourself
/UPDATED 1/12/2024
If you’ve ever applied for a credit card, loan or moved into a place where a screening takes place, there are three powerful companies that have significantly shaped your life.
In the United States, there are three main credit reporting agencies, and four others. Since almost everyone uses the top three (Equifax, Experian and TransUnion) and Innovis is coming up strong, we will focus our attention there.
Credit reporting agencies produce credit reports that include your bill payment history, loans, current debt, and other financial information. They also show where you work and live and whether you've been sued, arrested, or filed for bankruptcy.
Pause to think about that. This critically important information is collected essentially without your permission, is then sold to people looking to screen you, and can be used against you far more often than for you. In short, credit reporting agencies are powerful forces in our lives and we need to respect the good and harm they can do.
Credit reports help lenders decide if they'll give you credit or approve a loan. The reports also help determine what interest rate they will charge you. Employers, insurers, and rental property owners may also look at your credit report. You won't know which credit report a creditor or employer will use to check your credit. Since a creditor is unlikely to open a new account in your name without checking your credit, that protects you from fraudulent accounts. So, as citizens, we must play defense at each of the big three credit reporting agencies.
Recently, I heard a podcast from some very intelligent people. They told stories of woe, which I summarize in this way. If someone steals your credit card number, you can be inconvenienced for a few days while they issue you a new card. If someone steals your bank information, it could take weeks to get things straightened out. But if someone accesses your credit report to open new lines of credit, essentially stealing your identity, your entire lifetime may not be enough time to recover!
There are many for-profit companies (some of them are the credit reporting agencies themselves) who can protect you from potential identity theft. Each typically carries a monthly fee and they use fear to keep you as a customer. Going this route may be easy one-stop shopping, but for just a few minutes of your time, you can avoid the ongoing monthly cost.
I researched a free way to minimize the risk of credit/identity theft that I recommend everyone do immediately. This defensive step is called a credit freeze (you could also do a credit lock) and it stops would-be thieves from opening credit in your name.
First, a bit of education is in order. You may see the terms “credit freeze” and “credit lock” used interchangeably, and they do offer similar protections. The three credit reporting bureaus — Equifax, Experian and TransUnion —sometimes promote their credit lock services, which can carry a monthly fee, alongside their credit freeze options, which are free. A key difference is that it’s simpler to unlock a credit lock than it is to “thaw” a credit freeze. But a freeze may afford legal protections that a lock doesn't.
With TransUnion, you can call 888-909-8872 or go to <transunion.com/credit-freeze> to freeze your information. Input the requested information and click on the CREDIT LOCK option. Once your credit is locked (or frozen), any person, vendor or business who requests to view your credit report from TransUnion will be rejected.
Equifax has a similar free process. You can call 800-349-9960 or go to <equifax.com/personal/credit-report-services> to freeze your information or (my recommendation) go to <equifax.com/personal/products/credit/credit-lock-alert> and input the requested information and click on the CREDIT LOCK option. Now would-be bad guys will be locked out of your Equifax information.
Experian has a different take on how they do business. By U.S. law, all credit agencies must provide a free credit freeze option, but Experian heavily hypes and promotes their PAID credit lock service, which costs $25/month! For the freeze service, call 888‑397‑3742 or go to <experian.com/freeze/center.html>. I don’t recommend you pay for the lock at Experian, but if you like that option, go to <experian.com/consumer-products/creditlock.html>.
Finally, Innovis is starting to be used more often as well. It can’t hurt to freeze or lock your credit there as well. You can call 800-540-2505 or go to <innovis.com/securityFreeze/index>
I recently protected myself at all four credit reporting agencies using the online options. It took me less than 30 minutes to do all of them and I feel my identity and credit are much safer now. I hope this information proves to be valuable to you and provides some peace of mind. And, if you have kids who are establishing a financial life of their own, make sure to protect their credit as well!
Here is a bonus tip! If you are tired of seeing offers for credit cards, loans, etc. piling up in your U.S. Mail, go to <optoutprescreen.com> and block all that junk from coming! Save a tree, save your sanity.
