Congress Passes Bill Making Credit Freezes Free of Charge

Congress Passes Bill Making Credit Freezes Free of Charge article image.

The House of Representatives passed legislation on Tuesday that makes major changes to the 2010 Dodd-Frank Act, the sweeping financial regulation that was implemented in response to the 2008 financial crisis. Among the provisions in the Senate-crafted bill includes the allowance for consumers to freeze their credit reports for free. The President signed the bill on Thursday, May 24.

A credit freeze prevents credit reporting bureaus such as Equifax, TransUnion, and Experian (the publisher of this blog) from providing potential lenders with information on your credit report to open new credit accounts and loans. That keeps identity thieves from opening an account or accessing credit in your name, even if they have access to your personal data. In the wake of the 2017 data breach at Equifax, some security experts recommended that consumers consider freezing their credit to protect themselves.

Currently, it costs anywhere between $3 and $10 to freeze your credit, but you also incur additional charges to "unfreeze" your credit, as well. Some states have already made freezing and unfreezing free, and most states allow victims of identity theft to freeze and unfreeze their credit for free. Consumers must initiate freezes at each of the three credit bureaus.

This new legislation, which is expected to take effect about four months after the President signs it into law, will make both placing and lifting credit freezes free of charge. The new law will supersede existing state laws with one national free credit freeze law. Credit bureaus will be required to fulfill freeze requests in one business day if made online or by phone, and in three business days if made by mail.

If you freeze your credit report, companies that you already have accounts with will still be able to access your credit report, and financial institutions can still send you offers for credit cards and loans.

The bill also extends the length of fraud alerts from 90 days to 12 months for consumers whose identity has been stolen. A fraud alert lets potential creditors know that your information has been compromised and advises them to take additional steps to verify your identity before extending credit in your name. For more information on the differences between a credit freeze and a fraud alert, click here.