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8 Reasons Why TransUnion Offered Nationwide Credit Freezes

Posted on Sep 26, 2007 by Tom Fragala

I have yet to see a much analysis of the reasons for the surprise announcement that TransUnion is going to offer all 50 states and DC the ability to freeze their credit file. Apparently, few saw the TransUnion move coming. To me it’s clear and simple. Here are eight reasons why TransUnion made the move.  

1. It will be profitable. TU ran the numbers and figured out that if they made a proactive move to offer freezes in the remaining states that do not offer it yet, it will be lucrative (especially at $10 a pop for a single freeze or unfreeze using telephone or letter).
2. Change the story. By staking out the moral high ground, they can deflect any potential criticism that the cost of $10 is too high.
3. Reduce risk. It could stop any progress on new state credit freeze laws. This will reduce costs to comply with what would eventually have been two dozen or so new credit freeze state laws (for those states that don't offer it today). Who knows what these remaining states might have done--free reports for all, victims or not?
4. Bolster TrueCredit online sales. By being the first to do this, it will drive more membership of their online service, offered through their TrueCredit division, capturing more revenue. See, TransUnion/TrueCredit is the only company that can truly give you complete freeze/unfreeze control of your credit file over the web—in real time. That’s because there is no mechanism (also called an API) for a third-party company to “do” a credit freeze for you. And their online service is $14.95 a month, recurring revenue--very profitable.
5. Nothing to lose. TransUnion is behind Experian and Equifax in revenue, so why not take a shot at a potential game changer? They also are privately held so don't have to answer to Wall Street (yet).
6. IPO. TransUnion is privately held and owned by the Pritzker family and private equity investors. I assume they are thinking about an IPO in the next year or so. This generates some press and positive vibes. Perhaps that helped grease the wheels for this decision in the TransUnion board room.
7. Uniqueness. Only one credit bureau can say “we were the first to offer nationwide credit freezes.” They own that message now, and any counter moves by Experan or Equifax appear as just me-too reactions.
8. Limit government interference. This could help fend off intrusion by the FTC and Congress and provide some moral cover for them down the road. Consumer advocates might have less to squawk about as well, since many of them have been screaming for credit freezes for some time (rightly so).