Credit bureau Equifax says it is preparing a service that will give consumers a free, lifelong ability to lock and unlock their credit.
The announcement Wednesday also noted it has extended free credit freezes and free access to its TrustedID credit monitoring until Jan. 31, as it tries to mend its reputation after a massive data breach exposed the personal data of 143 million people.
The resulting firestorm of criticism from consumers and lawmakers has led to the departure of three top executives, including the CEO.
Confused consumers struggle with response
After the breach came to light, consumer advocates recommended people freeze their credit file to prevent criminals from using stolen data to open new credit lines. A freeze makes your credit file unavailable to anyone other than those who already have access, such as current creditors.
Consumers quickly saw the drawbacks:
- To keep your data safe, you need to place freezes with all three major credit bureaus, Equifax, Experian and TransUnion. Each can charge a fee, generally $10 or less, as allowed by state law.
- You have to save the PIN you’re given in order to lift the freeze later
- You have to unfreeze your credit when you want to use it — to apply for a loan, apartment or job, for instance. Unfreezing and refreezing can also trigger fees.
The bureaus are heavily marketing credit locks, a less-drastic option than a freeze. Locks are easier to lift and don’t involve a PIN you might lose. However, they may come with a monthly fee, especially if they’re part of a larger credit monitoring package. Their terms of service also may require you to waive your right to take part in a class-action lawsuit and instead use binding arbitration.
Equifax promises a better approach — in a few months
Interim CEO Paulino do Rego Barros Jr. announced in an op-ed published in The Wall Street Journal that the new lock service “will let consumers easily lock and unlock access to their Equifax credit files” at will. The service, to be introduced by Jan. 31, will be free.
The landscape may change again before the free lock is available. Sens. Elizabeth Warren and Brian Schatz have introduced a bill, the Freedom from Equifax Exploitation Act, that would allow consumers to freeze and unfreeze credit without having to pay.
What should you do now?
Here are the steps NerdWallet recommends, in order:
- First, gather your credit reports so you can check for unusual activity. If you have not accessed the free copies you’re entitled to every 12 months, get them from AnnualCreditReport.com now.
- Second, sign up for a free service that gives you access to credit report information on demand so you can track changes.Some personal finance sites, including NerdWallet, provide this. You won’t be able to sign up for one if your credit is already frozen.
- Third, freeze your credit at all three bureaus unless you are in the middle of applying for credit, such as mortgage or car-loan shopping. In that case a lock service or fraud alert might be better.
Let your credit freezes or fraud alert protect your credit files until the free lock becomes available. Then, examine terms of service carefully before taking Equifax up on its offer. What rights do you give up, if any? How will it serve you better than a freeze?
In any case, don’t wait for a service, four months distant, provided by the company that failed to prevent a hack and to respond adequately after it happened.
Learn more about protecting your credit