Finances FYI Presented by JPMorgan Chase
Receiving a data breach notification from your bank, credit card company, hospital, or another institution can be a frightening experience. It’s unsettling to consider that unknown parties accessed your personal information and wonder how, when, or if they intend to use it.
Placing a freeze on your credit is one powerful way to protect your data from fraud and identity theft.
This guide explains what a data breach is and delves into credit freezes, including how to use one to protect your personal information from further threats and harm.
What Is a Data Breach?
The National Association of Attorneys General defines a data breach as “the unlawful and unauthorized acquisition of personal information that compromises the security, confidentiality, or integrity of personal information.”
State laws vary about what constitutes “personal information.” However, it usually includes someone’s first name or initial, their last name, and one or more of these pieces of information:
- Social security number
- Driver’s license number or state ID card number
- Account number, credit, or debit number along with the security code, access code, PIN, or password to gain account access
Additional compromised data may include:
- Sensitive health information or medical history
- Biometric information
- Tax ID number
- Multiple email addresses and passwords
Considering how malicious actors might exploit your personal data is alarming. Unfortunately, data compromises constantly happen. Over 1.35 billion people were affected by data breaches, leaks, and exposure in 2024 alone. So, how can you protect yourself?
Fortunately, data breach laws help protect consumers and require companies to notify them when their data is exposed.
What Is a Credit Freeze and What Are Its Benefits?
A credit freeze (aka security freeze) is a decisive action you can take to protect yourself from identity theft, regardless of whether a data breach occurs, according to the Federal Trade Commission (FTC).
Implementing a credit freeze has the following benefits:
- It restricts access to your credit report.
- No one can open a new account in your name.
- Lenders cannot approve a new credit account in your name.
- You can place or lift a credit freeze for free.
- A credit freeze doesn’t affect your credit score.
How to Place or Lift a Credit Freeze
You can place, lift, or remove a credit freeze for free. To do so, you must contact each of the three major credit bureaus: Equifax, TransUnion, and Experian separately.
Filing a credit freeze online is the fastest method. You can also do it by phone or by mail. You must follow each bureau’s instructions and verify your identity as they require, for whatever method you choose.
When you freeze your credit report by mail, you may have to complete certain forms and provide copies of documents to verify your identity and address. They can include:
- Your Social Security card
- A government-issued ID
- Pay stubs or tax returns
- A lease agreement or utility bill
Online and phone freeze requests are usually processed immediately. However, it can take up to three days after receiving your mail request to implement a freeze.
Can Anyone View Your Frozen Credit Report?
While creditors can’t open new credit accounts in your name if your credit report is frozen, a freeze doesn’t entirely block access for some specific reasons.
Examples of entities with frozen access include yourself, debt collectors, your current creditors, identity verification companies, government agencies, and companies you might fill out a non-credit application for, such as a potential employer, cell phone carrier, or insurance company.
Things to Remember During a Freeze
A credit freeze is helpful if you suspect you’re a victim of identity theft or fraud, you lose your wallet, you receive data breach notifications, or you lose your passport, to name a few circumstances.
During a credit freeze, remember:
- Fraudsters can still steal your credit card and account information from your physical cards or individual creditors’ websites.
- You can still use your credit cards and access individual creditor accounts.
- A credit freeze is different from issuing a fraud alert to your creditors.
- You must unfreeze your credit if you apply for a new account.
- Healthcare providers carry your personal information and may suffer a data breach.
- A credit lock isn’t the same as a credit freeze. It may require a fee and only limit access to specific cards or creditors.
When and How to Unfreeze Your Credit
NerdWallet recommends keeping your credit frozen at all times. However, you may need to unfreeze or “thaw” your credit to apply for a loan, credit card, mortgage, or rental application, and can do so temporarily or permanently.
To unfreeze your credit, go to each of the major credit bureaus separately to make your request online, via the phone, or by mail.
You can also schedule when to refreeze your credit file, and the bureaus must honor your thaw request within an hour.
Knowing someone unlawfully accessed your personal data is disturbing. Thankfully, placing a freeze on your credit can protect your information from further illegal access.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
