Why Equifax victims should consider a credit freeze

Hotspot Shield cyber security expert Robert Siciliano on the major hacking of Equifax.

Credit reporting firm Equifax Inc. (NYSE:EFX) caused quite a panic Thursday when it announced that the personal data of approximately 143 million Americans — almost half of the U.S. population — may have been compromised by hackers. The company said it discovered the incident on July 29 and acted immediately to stop the intrusion, but it was too late.

If your personal information has been compromised you may want to consider a credit-freeze – the nuclear option of protection - Matt Schulz, senior industry analyst for CreditCards.com tells FOX Business.

Here’s how it works:

Credit freezes, which is also known as security freezes, essentially place a lock on accessing a borrower’s credit report. Basically, with a credit freeze, lenders and other companies—even you—cannot view your account.

Why do it?

As a result, it prevents anyone—again even the consumers themselves—from gaining access to new loans, such as credit cards and mortgages.

The Downside

It won’t stop people from accessing existing accounts, it will just stop people from creating new accounts with your information. But, Schulz warns that if someone gets ahold of your passwords on your current accounts, a credit freeze won’t do anything to keep them out.

An estimated 143 million consumers, that’s almost half of the U.S. population may have had their personal information stolen due to a data breach at Equifax, one of nation’s major consumer credit monitoring agencies . Here’s what you need to know

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Is Equifax offering credit freezes for those affected?

Equifax is offering a credit freeze (they call it “Credit Report lock”) for a year with their Trusted ID Premier service, so you won't have to pay for installing the freeze at Equifax. However, Schulz says to completely lock down your credit, you will need to do freezes at all three bureaus—Equifax, Experian, and TransUnion—and you will likely have to pay to set them up at the other two bureaus.

The Cost

While Equifax is offering the service free in wake of the breach, it generally costs about $30—about $10 at each bureau to set it up. Additionally, you may also have to pay to undo it as well but costs can vary by state.

How Long?

Schulz says it depends when it comes to how long you should freeze your accounts. As long as you’re not planning to apply for any upcoming credit—i.e. house mortgage—you can leave it on indefinitely, he says. But overall having a credit freeze is the ultimately the best way to keep the doors to your credit closed.