The security breach at credit reporting bureau Equifax potentially put the private information of more than 143 million people at risk. The records could be used to create fraudulent accounts sometime in the future. The company exacerbated a bad situation with a series of inept responses. The Wall Street Journal recently learned that hackers roamed undetected in Equifax’s computer network for more than four months before the data breach was discovered by the company.

The clear personal finance implication of the Equifax debacle is everyone should put a “credit freeze” or “security freeze” on their accounts at the four credit bureaus — Experian, Trans Union, Equifax and Innovis. The bureau isn’t allowed to give out your information in response to a query without your permission. It’s a way of preventing thieves from using your stolen information to create false accounts, which is why people typically put on a credit freeze when they’ve been a victim of identity theft.

Why wait? A credit freeze is smart money management in the digital age.

To be sure, you pay a fee ranging between $3 and $10 to put on a freeze (although Equifax has waived its fee for now). A freeze is also free for victims of identity theft. Don’t buy into the nonsense peddled by the merchants of debt that a credit freeze makes it hard to borrow. So what? You can thaw the account when you are going to borrow and a lender needs to check you out. A thaw takes several days and another annoying fee. You will pay a fee to refreeze the account.

In other words, with a freeze you must plan ahead if borrowing. Do you see a problem with that? I don’t.

Remember, by federal law you can get a copy of your credit report from each bureau for free once a year. The authorized provider of the service is AnnualCreditReport.com.

That said, there isn’t much more individuals can do. Washington needs to step in. For instance, Washington should ban fees on credit freezes for everyone. The industry should create a one-stop digital-shop for people to easily and quickly freeze access to their information at all credit bureaus. It’s still too hard for people to challenge and clean up their credit files.

I would like to see a debate on more fundamental reforms. For example, Adam Levitin, professor at Georgetown University Law School, has called for the bureaus to be regulated as public utilities. That won’t happen quickly — if ever — but it’s a worthwhile question to explore. In the meantime, freeze those accounts.

 

Chris Farrell is senior economics contributor, “Marketplace,” commentator, Minnesota Public Radio.