A bill just passed through the United States Congress that will make freezing your credit report free of cost. Previously, credit freezes had cost anywhere from $0 to $20. Many citizens were concerned over the security of their credit profile due to the massive Equifax breach.
The bipartisan effort in the House and Senate targeted citizen concerns over recent data breaches and the security of their credit reports. The provision comes as part of the broader roll-back of Dodd Frank banking regulations.
Whether you agree with the overall bill or not, few would argue that making credit freezes free is a positive move in the right direction.
What is a Credit Freeze?
In the United States, three consumer credit bureaus – Equifax, TransUnion and Experian – provide lenders and banks with information about citizens’ creditworthiness. When an individual applies for a loan, credit card or other line of credit, lenders will pull credit reports from one or more of the credit bureaus.
A credit freeze allows you to block lenders from accessing your credit report. This will of course prevent you from opening new lines of credit. But, importantly, it can also help prevent fraudsters and identity thieves from abusing your credit.
More info on freezing your credit with each bureau can be found here:
New Rules
The provision which just passed the House on May 22nd forces credit bureaus to make freezing and unfreezing credit reports free for all American citizens. The bill will go into effect in about 4 months after the bill is signed by the President.
The previous fees – usually in the range of $5 to $10 – may not seem like a big financial burden. However, consider that to effectively lock your credit, you have to freeze all three credit reports. Plus, if you ever need to apply for credit, there’s also generally a fee to unfreeze those reports.
The bill also requires bureaus to freeze your report within 1 business day if done online, and 3 business days if done via the mail.
Our Thoughts
This new legislation provides a rare – albeit minor – win for consumers. Most agree that individuals should have more control over their personal data and credit, and this is a step in the right direction.
It’s not groundbreaking news by any means, and some would argue that this change should have happened years ago – but it’s a positive change nonetheless.