Protecting your credit is essential to maintaining financial health, and one way to secure your credit reports from unauthorized access is through a credit freeze. In this article, we will discuss the benefits and drawbacks of credit freezes, as well as how to freeze and unfreeze your credit reports.
What Is a Credit Freeze?
A credit freeze, also known as a security freeze, is a security measure you can take to restrict access to your credit reports. Freezing your credit can help prevent identity thieves from applying for new credit in your name if that requires a hard inquiry of your credit reports.
However, it’s important to note that freezing your credit doesn’t mean your credit history is entirely off-limits to everyone. Any companies with which you have an existing credit relationship will still be able to see your credit history, even with a freeze in place. And government agencies executing a court order or search warrant will also be able to access your credit file.
How a Credit Freeze Works
When you freeze your credit with the three major national credit bureaus—Equifax, Experian, and TransUnion—you’re essentially telling them that you don’t want just anyone to be able to access your credit file. However, there are some exceptions to who can and can’t see your credit file while a freeze is in place.
A credit freeze can remain in place for as long as you want it to, and it’s up to you to decide when to lift it. Freezing your credit is now entirely free, thanks to a 2018 change in the law. Previously, there was a fee to freeze and unfreeze your credit.
Credit freezes don’t have a negative impact on your credit score, and they won’t prevent you from getting your free annual credit reports. But if you decide to apply for loans or credit cards, you’ll need to lift the credit freeze to allow creditors access to your file. However, you don’t have to lift a credit freeze for things like applying for a job or renting an apartment.
How to Freeze Your Credit
Freezing your credit is a straightforward process, and you can do so by contacting each of the three major credit bureaus. Here’s how to reach them:
- Equifax: Online at https://www.equifax.com/personal/credit-report-services/credit-freeze/ or by phone at 800-685-1111
- Experian: Online at https://www.experian.com/freeze/center.html or by phone at 888-397-3742
- TransUnion: Online at https://www.transunion.com/credit-freeze or by phone at 888-909-8872
To freeze your credit, you’ll need to give each credit bureau your name, address, date of birth, Social Security number, and other identifying personal information. Experian and TransUnion require you to set a unique PIN to freeze and unfreeze your credit, though Equifax does not.
Freezing your credit is free, and you’ll need to do it with all three credit bureaus to lock down each of your credit reports. Additionally, freezing your credit reports won’t freeze your credit scores, and your score can still go up or down while a credit freeze is in place, based on the information that’s being reported to the credit bureaus.
How to Unfreeze Your Credit
At some point, you may decide that you no longer need the credit freeze or want to temporarily lift it so you can apply for a mortgage, credit card, or other loans.
If you want to unfreeze one or all three of your credit reports, you’ll have to contact the credit bureaus individually. With TransUnion and Experian, you’ll need to provide the PIN you set up earlier.
Once you ask a credit bureau to lift your credit freeze, it must do so within a specific time frame. For requests made by phone or online, the freeze must be lifted within one hour. If the request is made by mail, the freeze must be lifted no later than three business days after it’s received.
Pros and Cons of Freezing Your Credit Report
Like any financial decision, freezing your credit reports can have both advantages and disadvantages. Here are some pros and cons to consider:
- Secures your credit report to help prevent identity theft and fraud
- Freezing or unfreezing your credit is now free
- You can quickly and easily freeze or unfreeze your credit online
- A credit freeze won’t hurt your credit score
- A credit freeze won’t entirely block access to your credit file
- You’ll need to unfreeze your credit before applying for loans
- A credit freeze can be an extra hassle if you need to frequently apply for new credit
Ultimately, a credit freeze could be an excellent choice if you’re concerned about the possibility of identity theft and you don’t plan to apply for additional credit anytime soon. However, there are other ways to protect your credit history against unauthorized access, and it’s up to you to weigh the benefits and drawbacks of each option.
Is a Credit Freeze the Same as a Fraud Alert?
One alternative to freezing your credit is to place a fraud alert on your credit profile. A fraud alert can protect your credit history from unauthorized access for one year, and an extended fraud alert can protect it for seven years.
Extended fraud alerts may be the better option if you’ve already been a victim of identity theft. To set up an extended fraud alert, you first need to create an identity theft report and then contact one of the three major credit bureaus to place the fraud alert. The credit bureau you report it to must report it to the other two bureaus.
A fraud alert or extended fraud alert won’t entirely lock your credit reports down, the way a credit freeze does, but they do require creditors and lenders to take the extra step of verifying your identity before authorizing new lines of credit in your name. This may be a simpler solution if you’d rather not go to the trouble of freezing and unfreezing your credit file.
In conclusion, a credit freeze can be a valuable tool in protecting your credit history from identity thieves. Freezing and unfreezing your credit is now entirely free, and it’s a straightforward process that you can easily do online or over the phone. However, it’s important to consider all your options and decide what’s best for your specific situation.
We hope you find this information useful. Please feel free to reach out to speak to one of our Experienced Mortgage Advisors if you need more information, 509-252-4000.