In this month’s edition of “Money Matters,” Scott talks about one important and easy way to protect your financial accounts: freezing your credit. Freezing your credit with the three major credit bureaus is quick and easy. Listen to learn more about how you can freeze your credit in minutes.

Money Matters: Why You Should Freeze Your Credit Transcript

0:00:00.0 CJ: WTIP is pleased to bring you another edition of Money Matters. It's a monthly feature intended to help us understand more about managing our finances. Scott Oeth is a certified financial planner and adjunct professor. He works with many individuals and has taught retirement planning and wealth management strategies to hundreds of financial professionals. And Scott is joining us now by phone. Thank you so much for being patient this morning, Scott. Really appreciate it. And I'm very interested in the topic that you want to talk about today, and that is freezing our credit. So, what is a credit freeze and why should we consider doing it?

0:00:40.8 Scott Oeth: Yes, well happy to be here as always, CJ, and very important topic. It seems like, CJ, every year, unfortunately multiple times per year, we hear about data breaches where millions of people's private data and financial information are exposed and potentially available to criminals. And these hacks or these breaches, there's so many of them, it seems like they've almost lost their impact. Sadly, businesses, governmental entities, and even credit bureaus themselves have all suffered major breaches in the last few years. And one of the risks here is that your personal information can be used in a form of identity theft, where criminals use that data to apply for loans or purchase items on credit and then you're on the hook. And the Federal Trade Commission reported in 2023, 5 million cases of identity theft that's reported.

0:01:34.8 Scott Oeth: And so, there's probably a lot more. And the thing is sometimes you can oftentimes maybe even you can work your way out of this and prove it wasn't you, but it's a lot of frustrations, a lot of time and hassle to try and do this, and you hear about some real nightmare situations. So well, we probably can't completely eliminate the threat of becoming a victim of identity theft. There are steps we can take to make it much more difficult and try to become a hard target. So, you should do your research, consult with your advisors, determine where you're most at risk. But in general, one simple step to help prevent identity theft is to freeze your credit. And this helps prevent against new loans being taken out or people purchasing things in credit under your name. So, what you do here, CJ, is you contact the major credit bureaus, Equifax, TransUnion, Experian, and tell them you want to freeze your credit. It's a well-established process at this point. And so, if someone tries to apply for a loan, well, the first thing that's going to happen, they're going to do a credit check to see do we want to offer a loan to this person? And you don't want some fraudster or some criminal to be able to do that with your good financial record.

0:02:44.0 CJ: All right. So, you contact these credit agencies, you tell them you want to put a freeze on it. Is there any downside to that? What if you then need to turn around and buy a car or something comes up and you need to take out line of credit or whatever it is? Is it easy to flip that back and is there any downside on the credit agency side? Do they look at you funny? Just talk to us about the ups and downs of it.

0:03:15.3 Scott Oeth: Yeah, exactly. Very good question, CJ. So, some of the downsides, it takes a little bit of effort, not too much. You need to either go online or you call these credit bureaus, Equifax, TransUnion, Experian, you can even send in a letter to do this. So, a little bit of effort to freeze the credit. It's not supposed to impact your credit score at all, so that's important to know. I think sometimes there's concerns about, you hear a lot about how this impacts your credit score. If you're looking to buy a car or apply for a loan like right now, maybe you hold off and do that first, but in general, it's not that difficult to unfreeze the credit, get the loan that you want, then refreeze your credit, put it on ice. So, when you freeze the credit, you'll receive a PIN, a personal identification number.

0:04:02.5 Scott Oeth: You absolutely want to store that in a safe place because that's what's needed to unfreeze it when you do go to buy a car or apply for a loan. And the unfreeze request, the agencies, if you're doing this online or by phone, they're supposed to unfreeze your credit within one hour. And if it's by mail, three days. So, it's pretty quick. And I think, the only real downside is just, it's a couple extra steps, but it's maybe like turning around and locking the front door when you leave your house and having to dig out your car keys when you come home at night to put an extra layer in there to protect your valuable assets.

0:04:39.3 CJ: All right, so we contact these credit agencies and tell them that you want to freeze your credit. What if you're getting a loan through, say, your credit union, your local credit union or your local bank? Will you still need to unfreeze it if you are dealing with an institution where you kind of know the people or you have your accounts or thinking something like that?

0:05:10.3 Scott Oeth: Yeah, that's a good question. I imagine that might, the answer might be one of these. It depends. I think most banks and credit unions probably still as a formality look at your credit report to say, oh, yeah, we know CJ, she's wonderful, such a delightful person. But has she been making payments on these other credit cards and things on time? Are there any delinquencies on utility bills or things like that that they might not see directly? So, the place they would go to find out about that is to look at your credit report to see, okay, yep, everything looks good, good shape. Sure, we'll make the loan, no problem. So, I think in most cases, lenders, even if they know you very well and you have a good relationship, they probably are doing a double check, are looking at your credit report, but I suppose that might not always be the case.

0:06:00.5 CJ: Okay. So, we can freeze it, we can unfreeze it fairly easily. Are there any other steps that we should be taking or know about to protect ourselves from identity theft?

0:06:13.3 Scott Oeth: Yeah. There's probably a long list of things, but a few highlights I think that are pretty simple and have a major impact. So, you've frozen your credit, request your free credit report. You can do this every six months. You can go to annualcreditreport.com, look over that credit report, look for anything suspicious or looks like it's out of line and start try and catch it as early as possible. So, monitor your credit even though it's frozen. Consider freezing kid's credit reports. Kids can be victims of identity theft as well, and their credit usually isn't monitored and this can go on for a very long time until maybe they're looking to buy their first car or rent an apartment or something like that when they leave home and suddenly they realize, oops, there's a big issue on their credit report.

0:06:57.8 Scott Oeth: So those are a couple ones. Request fraud alerts. This is something you can often put in place with credit cards and different financial institutions. And related to that, it's a bit of a hassle, but so many financial institutions, a lot of ones I'm working with clients have multi-factor authentication. It's a couple extra steps, but this can go a long way to prevent that password hacking. And as you're looking at all these things, your credit reports, your account statements, do monitor them, take a look, look for items that appear to be misreported or inaccurate. And if you see anything that's a mystery account or an old sort of zombie account that you have on there, you might really want to consider shutting that down. And I think just overall, a few of these steps here, put on your calendar, your to-do list, fun thing to do at night, maybe while you're watching a movie or whatever, but hopefully you become a hard target and some will move on.

0:07:58.3 CJ: All right. Scott, thank you so much for that. Is there anything else you want to add at this point?

0:08:04.9 Scott Oeth: I guess just, I really enjoy the conversation as always, and I know you'll post this episode on the WTIP site, I'll put on my blog as well. So, thank you.

0:08:14.4 CJ: And what is your blog, Scott?

0:08:18.3 Scott Oeth: Www.scottoeth.com, and Oeth is O-E-T-H.

0:08:23.3 CJ: All right. Thank you, Scott. We'll check in again in a month.

0:08:26.4 Scott Oeth: Thanks, CJ.