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Freezing your credit is now free in all states under a new law
- tuxxy 8y agoThe fact that this cost consumers money is such an obvious symptom of a larger problem. In case anyone hasn't seen this twitter thread before: https://twitter.com/matthewstoller/status/906257077215133696 https://twitter.com/matthewstoller/status/906257077215133696 The history of credit companies like Equifax are extremely dystopian. We should be working to find replacements for such systems.
- jtr_47 8y agoWe don't need replacements. We need to eliminate these companies.
- komali2 8y agoI'm all for these companies burning to the ground (after the building has been emptied). I'm also all about a currency-less society. But until we reduce scarcity to a point where that is possible, presumably lenders need some way to evaluate the "trustworthiness" of who they're lending to, yea? How should it be done? My first thought is an agency like the irs is set up to handle it.
- Retric 8y agoLoans don't necessarily make things more affordable. If 'nobody' could pay 1+ million for a home in a major city then home prices would drop until people could afford them. If anything credit agency's actively harm the middle class by allowing people to extract as much money from them as possible via higher prices. Sure, business loans are very useful but they don't require credit agency's.
- freehunter 8y agoPrices can only drop so far, though. (Warning: completely hypothetical numbers inbound... they're just being used to illustrate the point, not for gauging real costs) If a 2x4 costs $20 and you need 2000 of them to build a house, the house has to cost at least $40,000. And if pieces of siding cost $20 and you need 1000 of them, then that house has to cost $60,000. That's going to be hard to afford out of pocket. You can save the same amount of a mortgage payment every month, but you still need a place to live in the meantime so you're doubling your cost of living until you fork over the $60,000 in cash. And you might say the cost of a 2x4 would come down too, but if a lumberjack is making $15/hr and makes one 2x4 every hour, then the cost of that 2x4 can only be $5 cheaper before that lumberjack is getting paid more than the value of his work. And you might say the lumberjack could get paid less, but at $15/hr he already needs to work 4,000 hours before he can afford to buy that $60,000 house (assuming no other expenses). That's two years of savings before he can buy a house, with no money for food, no money for an apartment, no money for a car. If you cut his wages to make the house cheaper, now he has to work longer before he can buy a house. And since no one can afford the house anyway, he'll likely be laid off before he saves enough money because no one can buy the lumber because no one can buy the house built from it. And of course, this is all ignoring that none of these businesses are making any money in this entire hypothetical situation. If we didn't have home loans, the cost of housing would go down, but it would still be completely unaffordable without a loan even if the builder was losing money.
- Retric 8y agoRather than paying less per hour or less for lumber people would end up with smaller homes. A 40k down payment on a 200,000$ house already pays for a significant structure. Not marble countertops, but perfectly livable if small. Further, as the buyer would not have a mortgage they could upgrade from a ‘starter’ home. But, only if they actually felt the need and saved up even more cash.
- RobLach 8y agoHistorically lenders would lend over collateral, with your net assets being an indicator of your ability to pay them back.
- Spooky23 8y agoNow lenders almost have a hybrid model -- they use the credit scoring to allow them to write the loan well over the recoverable value of the asset. When I was buying my new house, I found a lender who was willing to write me an interest-only, 105% LTV loan for the new house while I simultaneously had a mortgage on the old property. The premium was only like 1.5%, and I re-financed in a few months after the house sold.
- cesarb 8y ago> presumably lenders need some way to evaluate the "trustworthiness" of who they're lending to, yea? How should it be done? The same way it's done in countries without these entities.
- umanwizard 8y agoHow is that?
- toomuchtodo 8y agoThe below article describes how it's done in Canada, the UK, and the EU. https://www.cnbc.com/id/41498097 https://www.cnbc.com/id/41498097
- xamuel 8y ago>presumably lenders need some way to evaluate the "trustworthiness" of who they're lending to, yea? Well, that's kind of, like, their whole job description. If you can't evaluate peoples' trustworthiness, you shouldn't be in the business of professionally loaning money!
- pbreit 8y agoHow would you propose lenders evaluate credit in such a situation?
- polalavik 8y agoA bit tangential, but I highly recommend the book "Debt: The First 5,000 Years"[1]. While meandering at times, it is a really interesting comprehensive dive into debt and society. [1] https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
- kart23 8y agoBlockchain /s?
- 40acres 8y agoI was able to freeze my credit w/ TransUnion and Experian easily this morning. However with Equifax I got a vague error stating that they could not process my request. After taking a look at the equivalent thread on /r/personalfinance I think someone may have preemptively frozen my account with my data that was exposed as apart of the hack. I guess I need to contact Equifax by phone now. A bit frustrating but locking down 2/3 isn't bad for 15 minutes of work.
- elbac 8y agoExperian keeps asking me to pay for this feature. Where did you find it?
- albertop 8y agoFreeze cost is only one part. Not mentioned in this article are costs of temporary unfreeze. TransUnion used to/still does charge $10 for each unfreeze.
- sp332 8y agoThe article says unfreezes should also be free now.
- hnburnsy 8y agoDon't forget Innovis and CheckSystems. Great information here. https://krebsonsecurity.com/2018/09/credit-freezes-are-free-let-the-ice-age-begin/ https://krebsonsecurity.com/2018/09/credit-freezes-are-free-...
- lockes5hadow 8y agoThere is also NCTUE Freeze page - http://www.nctue.com/Consumers http://www.nctue.com/Consumers
- dsfyu404ed 8y agoToo bad this wasn't in place about a year ago when I was freezing my credit because of Equifax and getting temporary thaws to apply for a mortgage.
- teeray 8y agoThe entire concept of "freezing" and "unfreezing" needs to go away. It should be inaccessible by default, except by a time-limited token generated by the person applying for credit.
- ihattendorf 8y agoI agree, but how should that person generate a token? A hardware device? What if they lose that device? Try and think of it from the perspective of someone who only uses their computer for facebook/banking/candy crush.
- wolfgang42 8y agoNo computer needed: when you freeze your credit, the agency mails you a sheet of one-time-use codes. When you apply for credit, you give the bank or whoever one of the codes, and then cross it off of your sheet. If you lose the paper, you have to go through a manual process to get a new one, the same as you would if you lost the PIN they give you now.
- ihattendorf 8y agoRight, but a lot of the times the information required for the manual process is also compromised. This just lowers the security level down to whatever the manual process is.
- wolfgang42 8y agoI think it raises the security to that of the manual process. Unless you're saying that right now the system of freezing and unfreezing is more secure than one-time codes would be?
- ihattendorf 8y agoYou're right. I was thinking of it from the point of lowering it from a hypothetical hardware device to the manual process instead of raising it from the current system.
- fpgaminer 8y agoFreezing your credit sounds scary, but I do generally recommend looking into it. I froze my credit awhile back now, long before the Equifax breach, just as a proactive measure. Better to do it _before_ your identity gets stolen. Since the freeze I've opened up a few lines of credit (loans, credit cards, etc). It's not that painful. Most of the time you just find out which credit bureau(s) they're going to pull from beforehand, do a temp unfreeze, and then submit your application like normal. It takes a few extra minutes of your time, but is otherwise not a bother. There have been a few instances where the companies I was working with were just ... incompetent and didn't know who they were going to pull their reports from. Yeah ... but in those cases I just submitted the application and waited for the rejection letters to roll in, which state which company reported a 0 credit score :P Is it as easy as before? No. But how often do you open lines of credit or bank accounts? Not often. And I don't think doing those things should be easy anyway. The huge plus here is that you don't have to worry about identity theft like everyone else. I've seen too many friends and family go through identity theft now. It's horrific, stressful, time consuming, and seemingly endless. And on the bright side, I think having your credit frozen is becoming more and more common, which means companies are getting more used to dealing with people who have them. So the process is becoming more streamlined over time. Now the caveats. Yes, it cost me money. It may still cost money even with this new law; as a fellow comment points out you may still have to pay whenever you need to temporarily unfreeze your credit. And yes, it's a racket. In many ways it feels like a shakedown. But such is life. People cheat you out of your money every day. This wasn't a mountain I was willing to die on.
- brational 8y agoDo you have kids? If so - do you freeze theirs too? (I'm considering doing so myself)
- toomuchtodo 8y agoIt would not hurt to do so.
- etrautmann 8y agoI froze my credit after the last breach. It then took me two extra painful weeks attempting to sign a lease when Experian's credit unlock did not work for me. The online form to unlock credit was inappropriately telling me my credit was unfrozen, which it was not, and my credit check was unable to run. I finally somehow found a similar but different credit unlock page with duplicate functionality that ended up working, but only after 5 unsuccessful attempts to unlock and the apartment rental company providing me the benefit of the doubt with five failed credit checks. This is too opaque and painful, and the companies in question are entirely at fault. Not sure what to do aside from raging into the void...
- jumbopapa 8y agoFreezing my credit still allows it to improve based on my existing lines of credit, correct?
- caleblloyd 8y agoI have mine frozen and my credit scores on Credit Karma are still visible and change monthly. Credit Karma lists Equifax and TransUnion scores.
- jumbopapa 8y agoPerfect. I suppose that I will go ahead and freeze mine as I don't foresee any need to apply for credit in the near future.
- astura 8y agoThe credit file exists as normal, it's just inaccessible by lenders (and insurance companies, cell phone companies, internet companies, etc.) for the duration of the freeze.
- kimsk112 8y agoIf you have kids, you might want to freeze their credit too. I listen to "The Perfect Scam" podcast, and they said that thief now prefers to steal kid or teenager identities since they can milk their account longer.
- usermac 8y agoWhat is the benefit of freezing your credit?
- criddell 8y agoSomebody pretending to be you can't borrow money in your name.
- astura 8y agoThey can, if the lender doesn't do a credit check, its just that most lenders won't loan to someone without first checking their credit file. Someone can run up medical debt in your name, since doctors don't do credit checks.
- EGreg 8y agoYou know what they should pass a law to do? For you to set up a SECOND FACTOR AUTHENTICATION where you would approve before some new credit account is reported. Maybe even for a credit check. 1. Apply for credit 2. They check your report 3. They make an offer 4. You review the offer 5. You endorse it 6. They submit to bureau 7. Bureau sends you a text or to their app om your phone with details of offer You can endorse at step 6 by a cryptographic signature or at step 7 use Authy, text or the bureau’s app. How hard is that??? Seriously!! We have Google Authenticator for bank accounts but not credit bureaus? It would be strictly opt-in so those who care about identity theft CAN make sure to prevent it.
- mjevans 8y agoWould it be possible to require the use of an OpenPGP or other actual cryptographic identity that matches a whitelist of keys I or a government agency provides for anything more major than a typical shopping trip to the grocery store / Costco? Phone numbers and cell phones are too easy to have redirected; so an actual cryptographic ID is required. That's why I want the government to sign off on personal IDs when /they/ confirm my ID at drivers/identification license updates.
- frankydp 8y agoIf my credit card company can call and text me while I stand at the Point of Sale for an high risk approval, why then can these folks not do the same. It should be the default behavior. Now the challenging and arguable more difficult thing would be debt collection. Edit: The short answer is because the consumers are not the customers.
- kgwxd 8y agoWouldn't be necessary if we had a law that makes the banks liable for getting defrauded instead of the individual who's name, and other publicly available "secret" information, happens to be used to do it.
- ihumanable 8y agoExactly. Let's take a look at what "Identity Theft" actually is. You go to a bank, give them your property, with the agreement that they will keep it safe and only allow you to access it, in return they get to lend it out and make interest with it. Then the bank just starts handing your property out to random people. They shrug and go, "Your identity has been stolen, it's your fault, best of luck getting it sorted out." That's insane. The bank failed to uphold their end of the deal, they failed to keep your property safe and guarantee that only you could access it, they should have to pay to fix their mistake. If financial institutions were responsible for erroneously dispensing money, establishing lines of credit, etc the incentives would align correctly and this problem would be solved. As long as they are allowed to push this responsibility onto the consumer we will have to keep dealing with a patchwork of locks, freezes, dark-web scans, vigilance in checking your credit report, and even if you do everything right, you will be to blame if a dedicated attacker tricks the bank. It's your fault, no matter how careful and diligent you are, that the bank made a mistake, they have no incentive to make this better.
- adrr 8y agoBanks are liable. If a fraudster steals someone identity and setups a bunch of credit cards and/or loans, the bank eats the loss. This is protected in contract law because the bank doesn’t have a valid contract with the victim.
- kgwxd 8y agoAre they held liable for the pain and suffering that ensues? Are they forced to fix the persons credit score? They need to be punished for it, not just eat the loss. They make up the loss by charging insane interest rates, late fees and service fees. There should be jail time and personal responsibility.
- nnq 8y agoWhen will people realize that the whole idea of a "credit score" is insanely bad - just lend to anyone under the same conditions, do personal checks on case by case basis etc. There are parts of the world that have all regular financial tools like mortgages and all without the credit score part. Keeping a "score" is just a means of discrimination and oppression. Yeah, credit will become more expensive, as it should be! People should only lend money with verified collateral etc. And maybe it's not "fair" to lend anyone at the same rate, just as it's not "fair" to have "universal" health insurance. But you know what? F fairness! Nobody needs "fair", we need systems that work, and do so reliably and in easily understandable ways, making the word a place you would want to live in. We can afford to de-optimize some aspects of the economy in order to get a better quality of life with low stress and all. Equality and anonymity is what everyone needs more of, not "fairness" and invasion of privacy (aka "transparency"), with the former usually used to justify the latter.
- perl4ever 8y agoI don't think universal credit availability is analogous to universal health insurance, for specific reasons. People who are against universal health insurance often, I think, imagine spending vast or unlimited amounts should they have a terminal illness. And therefore, they are afraid that society cannot afford to provide that to everyone. I think that is not a real concern, because the possibilities for treatment are limited in practice sufficiently that universal health insurance is workable. Billionaires do not typically spend all their billions on trying to stave off death. By contrast, universal availability of credit has no such inherent limit on demand. One person who would otherwise have poor credit could impoverish a nation, in principle, because borrowed money can be utilized for any desire. If we do put limits on the credit provided to people, then we have not changed the nature of it to make it universal and equal and something will be needed to discriminate, even if we don't call it a credit score.
- astura 8y agoSo you think requiring someone to have verified collateral to take out a loan is less oppressive than allowing someone who doesn't have any collateral to use solely their reputation to borrow money very cheaply? Your hypothetical system makes financial products only available to wealthy. That's pretty much the definition of oppressive. A system where more people have more access to more products is the fairer one. Debt can be an important tool if used correctly.
- etatoby 8y agoCan anybody explain what this is about and what a "credit report" is? I've owned and used bank accounts and credit cards for my entire adult life, that is to say, several decades (in the EU) and I've never come across this concept.
- oehpr 8y agoI might be getting your question wrong here but have a listen to this podcast: https://www.npr.org/sections/money/2017/10/06/556212654/episode-798-bad-credit-bureau https://www.npr.org/sections/money/2017/10/06/556212654/epis... I'll give you a quick summary version based on this though. Business owners were looking for a way to tell if the person standing in front of them will likely pay them back. So Businesses go to companies like Equifax that try build credit reports on people and basically ask "can I trust john smith?". Essentially they're big time data brokers. The thing is that when you created and owned accounts with banks and established credit cards, the whole time those banks were funneling your activities to companies like Equifax, who then build these credit reports against you. So even if you never interacted with them, your banks likely told them everything about you. This kind of thing is something you only really find out about if you go looking for it.
- etatoby 8y agoOhh... that's what Equifax does! I could never figure it out from the news articles. Thanks for the link, I'll listen to it. You're right, I don't think I want to go looking into my own reports, until (if ever) I need to. “Where ignorance is bliss, 'tis folly to be wise.”
- bogomipz 8y ago>"Placing a freeze should be fast and relatively easy, although you will have to sign up for separate ones at each of the three credit bureaus." This is so broken. Freezing your credit at one should automatically freeze your credit at all of them. This functionality already exists for providing a 90 day lock on your profile. Making people jump through 3 sets of hoops to freeze and unfreeze their credit is a joke. I'm guessing this was law makers capitulating to the will of the industry instead of the consumer. Sadly no surprise there. >"If the credit bureaus cannot sufficiently verify your identity based on the information you've provided, you may need to mail in copies of your driver's license, utility bills or other supporting documentation to validate your identity and execute a freeze." What constitutes "sufficiently" can be arbitrarily obscure. Examples of this include. The number of a landline you had 20 years ago, the zip code of a company that bought a now defunct company you used to work for. Your only recourse is snail male and making photocopies of sensitive documents and mailing them to a P.O box somewhere. These same "verification" systems also randomly report failure during the process leaving the consumer with no choice but to snail male. "We want to make it is as simple as possible to access that freeze, but we want to protect you at the same time," Experian's Griffin said. "We need to strike that balance." This is nonsense and nobody believes this for a minute. This shady industry finally got called to account albeit in a quite limited way and they will do everything possible to make this as inefficient as possible. There may be a law on the books now that they can't charge but there is no law that says these systems need to be maintained, verified to be working or efficient.