Consumers can obtain free credit freezes for themselves and their underage children starting on Friday, September 21, 2018, due to the passage of a federal consumer protection law earlier in 2018. Getting a credit freeze can help protect you from identity theft. Parents and graduate students should be aware of the possible impact of credit freezes on applications for the Federal PLUS loan.

The legislation also increases the length of initial fraud alerts from 90 days to one year and provides for extended fraud alerts as long as seven years. Active duty members of the U.S. Armed Forces will also be able to get free credit monitoring from the credit reporting agencies.

Credit bureaus will provide credit freezes for free

Section 301 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174) requires consumer reporting agencies, such as Equifax, Experian and TransUnion, to provide free credit freezes upon request of the consumer. Removal of a credit freeze will also be free, including temporary removal of a credit freeze for a period of time specified by the consumer.

Previously, credit freezes were free only after identity theft. Otherwise, credit bureaus charged a fee to freeze or unfreeze access to the credit record. Credit reporting agencies provided free fraud alerts, which did not prevent opening of new accounts in the consumer’s name. Now, both credit freezes and fraud alerts are free.

A credit freeze blocks access to the personal and financial information in the consumer’s credit report, preventing new accounts from being opened in the consumer’s name. Credit freezes do not apply to pre-existing creditors of the consumer who may be reviewing or collecting the account. For example, the recipient of a check from the consumer may access the consumer’s credit history.

Free credit freezes for children

Most children do not have a credit history. But, that doesn’t stop identity thieves from getting credit cards and other forms of debt in the child’s name. A credit freeze can help protect children from identity theft.

Parents can request a free credit freeze for their children who are under age 16.

To request a child credit freeze, the parents will need to provide proof of the relationship, such as a copy of the child’s birth certificate, as well as authentication of the parent’s identity.

Impact of credit freezes on student loans and parent loans

The borrower of a Federal Direct PLUS loan, including a Parent PLUS loan and a Grad PLUS loan, must not have an adverse credit history. To check for an adverse credit history, the U.S. Department of Education will review the borrower’s credit history as part of the application process. If a borrower’s credit history is frozen, however, that will block processing of the application for a Federal PLUS loan.

Accordingly, prospective borrowers of a Federal Direct PLUS loan must unfreeze their credit records with all three of the major credit reporting agencies before applying for a Federal Direct PLUS loan and keep them unfrozen until the loan has been approved.

Eligibility for the Federal Direct Stafford loan and Federal Direct Consolidation loan do not depend on the borrower’s credit history, so unfreezing your credit history is not necessary for those loans.

Private student loans, on the other hand, are credit underwritten. Borrowers will need to temporarily unfreeze their credit before applying for private student loans.

How to request a credit freeze

Consumers can request a credit freeze by telephone, website or by postal mail.

There will also be links to the free credit freezes provided by each of the credit reporting agencies on the Federal Trade Commission’s web site, IdentityTheft.gov.

The credit reporting agencies must freeze your credit within one business day, if you request the credit freeze by telephone or web, and within three business days, if you request the credit freeze by postal mail.

Proper identification will be required.

A credit freeze can be removed within one hour, if requested by telephone or web, and within three business days, if requested by postal mail.