This time last year, one of the major credit reporting agencies (CRAs), Equifax, lost personal information on nearly half the people in the country through a data breach. Many consumers put credit freezes into place. Depending on the circumstances and state in which you lived, you might have had to pay for them. Not starting Friday.

A law from earlier this year goes into effect and makes it free to freeze and unfreeze your credit files. You can also freeze your children's credit files until they are old enough to need them. (Most people don't realize how often target credit profiles of youth, create havoc, and then move on for the kids to suffer the aftermath for years. Sometimes it is parents who do this.)

The law also extends the length of a fraud alert from 90 days to one year. Identity theft victims can get extended alerts for seven years. But let's concentrate on credit freezes, which can be a great tool, especially given the frequency of data breaches these days.

As someone who had deeply researched identity theft and been one who had to lock things down after the Equifax breach, I'll offer a warning. Although the process of creating a freeze is pretty straightforward, there are plenty of hurdles and hoops to clear going forward.

1. What a credit freeze does

A credit freeze puts a solid lock on the data that a CRA can provide its subscribers. Companies with a current credit relation with you can continue to get updated information. New companies cannot. You can permanently or temporarily lift a credit freeze. You can do this via mail, phone, or online. The latter works relatively smoothly.

Each CRA operates separately and independently of the others. As you never know which of them lenders might use, you would need to set a freeze on each and every one. That will complicate things, as you will soon see.

2. Credit checks aren't just about getting credit

Credit card companies and lenders of all types, including mortgage and auto lenders, check your credit report -; known as pulling a hard report -; any time you look to borrow money.

But your credit report becomes important in other ways as well. Want to open a bank account? Many institutions will run a "soft" credit report to verify your name, address, and other particulars as part of identity verification.

Wireless carriers want to see a credit report before giving someone a pay-in-arrears account. Otherwise, it's pre-pay.

Need to rent an apartment? Expect a good chance that you'll need to allow a credit check. Landlords want to see that you pay bills on a regular basis. Utility companies might also want to run a check.

3. Practical limitations a credit freeze puts on you

Here is the practical problem with a credit freeze: If it's on when someone wants to perform the check, they can't and you're out of luck. That happened to me recently as I tried to open a new account with a bank that had a better handle on international payments, owning to a shift in some of my business.

The only way I knew was getting an error message and email that the bank couldn't verify my identity. When I called and asked, the first question a customer service agent asked was whether I had placed a credit freeze at the CRAs.

This has clearly become a common issue. If you get a more cryptically worded message from automated systems and no clear way to contact a human being, you might find yourself out of luck trying to learn what happened.

4. You'll have to plan ahead

As I mentioned, you can temporarily remove credit freezes, typically specifying the days during which you want it suspended, with automatic reintroduction after. That means planning.

The new law says that the CRAs must lift a freeze within an hour of request. If you want to bet on mandated speed, good luck. Smart money says to plan ahead of time whenever possible.

Unless you know in advance which agency a company uses, best to plan unfreezing all three for the same period. That way, you don't run back and forth.

Part of a credit freeze involves a PIN to help identify you. Without that PIN, you won't be able to lift the freeze. Keep it somewhere it will be available if you need it. Again, you will be able to change the freeze status by phone, mail, or online. Third option is likely to be the fastest. Mail can take three days.

Also, I pass on a tip I received from a lawyer who has done a lot of work in helping people deal with identity theft. Consider giving the CRA your mobile number so if there is a question, they can reach you at the time, not leave a message elsewhere.

5. There are other options, but they tend to cost serious money

There is another option, offered by all three of the big CRAs, called a credit lock. It is similar in that when the lock is set, companies that are new to doing business with you cannot get access.

However, a credit freeze is a legally mandated tool and now free. A credit lock is a proprietary service that can be activated or taken off via an app. Tremendously convenient. It can come with a cost. For example, TransUnion, one of the three big CRAs, offers a Credit Lock Plus service as part of wider credit monitoring and charges $19.95 a month. It does also work with Equifax, but that is still more than free.

Published on: Sep 20, 2018