Is there an impact on insurance when you freeze your credit?

Lock on paper credit freeze image

Originally published Nov. 17, 2017.

Last year, following the Equifax data breach, I decided “enough is enough” and froze my credit with the three major credit reporting agencies (Equifax, TransUnion and Experian). Freezing your credit, also called a security freeze, is a proactive way to prevent identity theft. Given the major data breach recently revealed by Marriott, I thought it would be good time to revisit this blog post as it may help your or your clients who have also had “enough.”

Why Freeze Your Credit?

When your credit is frozen, banks and other companies that lend credit cannot view your credit information. As a result, people with ill intentions, such as committing identity theft by opening new loans or credit cards in your name, are stopped in their tracks because the information is not available.

However, keep in mind when you freeze your credit, it will obviously make it harder for you to open new accounts in your name too.

After doing some research, I came across an extremely helpful article on alerting consumers about how TransUnion tries to steer consumers toward “locking” their credit rather than freezing it.

I’m still not totally sure what a credit lock is, but turns out it costs $19.95 per month. . .no thanks. Overall, I found the freeze process with Experian to be the easiest. I had to try with Equifax a few times because their site was not working. . .go figure.

If you’re interested in freezing your credit, here are the links to the three major credit reporting agencies:

Identify Theft Doesn’t Just Impact Adults

My next step is to freeze my children’s credit. This is a complicated and laborious process that requires gathering documents such as copies of social security cards and birth certificates. (I need to think about whether or not I trust Equifax with this information!)

After doing research, I learned that minors are far more likely to be victims of identity theft than adults with more established credit histories.

Check out this stat from an article in USA Today: “According to a study by Carnegie Mellon University’s CyLab, children are 51 times more likely to be a victim of identity theft than adults.”

Yikes. I better get working on protecting my children’s credit.

Good News for IAs

Wait a minute – will freezing my credit negatively impact my insurance rates since companies need to have access to information in my credit history? The answer is no.

Fortunately, the law that Ohio has in place to allow consumers to freeze their credit offers a solution. It gives a consumer credit reporting agency the ability to release a credit report in certain instances, such as when an entity needs access for use in setting or adjusting a rate, adjusting a claim or underwriting for insurance purposes.

This is good news for independent agents because there will be no hassles with your clients who have placed freezes – it will be business as usual.

No More Fees

At the time I originally wrote this blog post in late 2017, consumers in Ohio still had to pay a $5 fee with each credit bureau to freeze their credit. As a result of federal legislation signed into law in the spring of 2018, consumers can now freeze their credit with no charge!

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