For nearly three months this year, hackers had access to files at Equifax, a financial services company and one of the big three credit reporting bureaus. All told, more than 145 million people may have had their Social Security numbers, birth dates and addresses stolen. Some driver’s license and credit card numbers may also have been taken.
While not the biggest security breach in history, it could be the one that causes the most damage. With Social Security numbers, addresses and birthdates, thieves can do everything from open new bank accounts to file fraudulent tax returns.
In the face of those scary outcomes, a credit freeze might seem like the answer. While a freeze can be beneficial, make sure you understand what it does and how it protects you. Don’t believe these six myths about credit freezes.
[Read: Here’s Why a Credit Freeze Won’t Protect Your Identity Completely.]
Myth No. 1: You have to be an identity theft victim to request a credit freeze. Although credit freezes have been widely discussed in the wake of the Equifax breach, you don’t have to be a victim to use one. “As a consumer, you have a right to freeze your credit at any time,” says Julie Myhre-Nunes, director of content at NextAdvisor.com. State laws govern the use of freezes and allow people to freeze their credit at any time for any reason. The only difference for identity theft victims is that fees may be waived for them.
Myth No. 2: Credit freezes ensure you won’t be a victim of fraud. Not really. A security freeze prevents someone from using your credit report to open a new line of credit, but that’s all. “It isn’t a cure-all,” says Joe Heider, president of Cirrus Wealth Management in Cleveland. “It solves one problem.”
A credit freeze won’t stop someone from running up a balance on an existing credit card or draining a bank account or filing a fake tax return in your name. For the latter, the best defense is to file your 2017 tax forms as soon as possible. For everything else, monitoring accounts for suspicious activity is crucial.
Still, a freeze does have benefits. Most importantly, it makes the stolen data significantly less valuable to crooks. “If you block the exchange where people turn the data into money, there’s no currency for it,” says Jerry Linebaugh, founder of JLine Financial in Denham Springs, Louisiana.
[Read: What Is Equifax and Why Does It Have My Financial Information?]
Myth No. 3: You only have to request a freeze from one credit bureau. “A huge mistake people make is they only freeze one or two reports,” Myhre-Nunes says. Since this latest breach occurred at Equifax, people might be inclined to believe they only need to freeze their credit report at that bureau. However, the data stolen from Equifax can be easily used to request credit through a lender who uses a different reporting bureau.
“The bad guys know which credit cards to go to,” Linebaugh says. If they think an Equifax report is frozen, they will attempt to open fraudulent accounts at lenders who use TransUnion or Experian instead. That’s why he tells his clients, “Ice all three to be free.”
Myth No. 4: It’s difficult to request a freeze. Requesting a credit freeze isn’t difficult and can be done online, by phone or by mail. The bureaus may charge a small fee for the freeze, and that amount varies by state and can depend on whether someone has been a victim of identity theft.
Myhre-Nunes estimates that 30 minutes would normally be plenty of time to call and request a freeze. However, “Right now is a unique time because of the Equifax breach,” she says, and phone lines might be jammed with customers trying to place their request.
Myth No. 5: You won’t be able to use your credit after you freeze it. A security freeze will prohibit new lines of credit, but it can be lifted at any time on a temporary or permanent basis. “Ask the [lender] which agency they use and they can unfreeze that report,” Heider says.
To lift a freeze, consumers must provide a PIN that was issued when the freeze was initially granted. There may also be a fee for this service.
[Read: Should You Use a Credit Monitoring Service?]
Myth No. 6: A credit freeze and a credit lock are the same thing. Linebaugh has told his clients to be wary of credit bureaus trying to steer them toward credit locks. “Freezes are part of the law,” he says. “Locks are products, and they are definitely missing certain protections.”
Most notably, credit locks may have language in their contracts requiring arbitration. They may also be sold as part of monitoring or alert packages that cost extra. “It’s a terrible idea,” Linebaugh says of signing up for a lock when a freeze offers more consumer protection.
Regardless of whether your data was stolen in the Equifax breach, a credit freeze can be a smart idea. Although unfreezing a report adds an extra step to the process of applying for a loan, it may be a small price to pay to avoid someone going on a shopping spree in your name.
More from U.S. News
6 Things to Know About Free Credit Scores
How to Avoid Being a Victim of Tax-Time Identity Theft
How Online Identity Thieves Are Getting Smarter
6 Myths About Credit Freezes originally appeared on usnews.com
