Have you ever worried about identity thieves taking out loans or opening credit cards in your name? With data breaches constantly in the news, protecting your financial information is more important than ever. Freezing your credit is one way to lock down your credit reports from potential fraudsters.
In this comprehensive guide, we’ll walk through everything you need to know about credit freezes: what they are, why they matter, and step-by-step instructions for freezing credit with each bureau. You’ll learn when a freeze is useful, when to lift it, and smart strategies for managing your frozen credit.
Let’s dive in so you can decide if freezing your credit is right for your situation.
What is a Credit Freeze and Why Does it Matter?
A credit freeze seals your credit reports and prevents lenders or others from accessing your files or opening new accounts in your name. Also called a security freeze, it lets you control who can access your credit by locking it down tight until you lift the freeze.
Here are some fast facts on why credit freezes are important:
- 33% of Americans have experienced identity theft, with credit card fraud being the #1 type according to the Federal Trade Commission
- There were over 1.4 million identity theft reports in 2021, up nearly 110,000 from 2020
- Child identity theft increased by 51% in 2021 over 2020, impacting 140,000 kids
Freezing your credit blocks identity thieves from committing fraud in your name. It stops them from accessing your credit reports or opening new credit cards and loans when your credit is locked down.
Freezing your credit does not impact your existing credit accounts or how you use them. Once frozen, you can still use your credit and debit cards normally. It only prevents new accounts from being opened until the freeze is removed.
How Do Credit Freezes Work?
Freezing your credit is done by contacting each of the three major credit bureaus – Equifax, Experian, and TransUnion. You must contact each one directly; freezing your credit with one bureau does not automatically freeze your credit with the others.
Here is the freeze process with each credit bureau:
- Request a freeze online, by phone, or through the mail
- Provide personal details like your SSN and date of birth
- Create log-in credentials for your online account
- Receive confirmation once the freeze is in effect (within hours or 1-3 days)
When freezing your credit online or by phone, the freeze is typically effective within an hour, if not immediately. If submitting a request by mail, processing takes 1-3 business days once received.
To lift the freeze, you simply log in to your account and request either a temporary lift or permanent removal of the freeze. The credit bureaus must lift a freeze within an hour for online/phone requests, and 1-3 days for mailed verifications.
The freeze remains on your account indefinitely until you request it to be lifted or removed. You are in complete control.
When Should You Freeze Your Credit?
Here are common situations when placing a credit freeze makes sense:
You’ve been a victim of identity theft or a data breach. Freezing your credit after a breach prevents thieves from opening new fraudulent accounts and limits the damage they can do.
Losing your wallet, Social Security card or passport. If these vital items are lost or stolen, freeze your credit right away before identity thieves can use them fraudulently.
Suspicious activity appears on your accounts. Get ahead of identity thieves by freezing your credit at the first sign of any strange charges or unknown accounts opened in your name.
When you know you won‘t need new credit. If you have no plans to apply for loans, such as when paying down debt or during retirement, a freeze adds protection.
Safeguarding your child’s credit. Child identity theft is unfortunately common, but freezes can prevent criminals from using your child’s Social Security number until they are older.
Comparison shopping for loans. Keeping new inquires off your report lets you find the best loan rates without impacting your credit score temporarily.
Ongoing identity theft protection. For those highly concerned with fraud, freezing credit indefinitely until needed provides peace of mind.
How Do I Lift a Credit Freeze?
Since lenders can’t run credit checks while your credit is frozen, you‘ll need to lift the freeze when applying for loans, credit cards, apartments, utilities, or anywhere that requires a credit check.
Here are the steps for lifting a credit freeze with each bureau:
- Log in to your freeze account on the bureau’s website or call their customer service line.
- Provide your login credentials or answer identifying questions to verify your identity.
- Request either a temporary lift of the freeze for a specified period, or choose to permanently remove the freeze.
- The freeze is lifted within an hour for online/phone requests or 1-3 days for mail.
- Apply for new credit during this window before the freeze resets itself.
When applying for credit, ask which bureau the lender uses and only lift the freeze with that one to save time. Otherwise, lifting freezes from all three makes the credit approval process easier but takes more effort. Don’t forget to refreeze your credit after opening your new account.
Pros and Cons of Freezing Your Credit
- Free to place, lift, and remove credit freezes
- Lowers risk of criminals opening fraudulent accounts
- Does not negatively impact your existing credit score
- Stays on your report until you choose to lift or remove it
- Still lets you use current credit cards and loans as normal
- Not failproof protection against all identity theft
- Inconvenient when needing to lift the freeze temporarily
- Must be managed carefully with separate bureaus
- May cause delays when legitimately applying for new credit
The barriers freezing your credit introduces to lenders helps prevent identity theft. But doing so requires diligent planning any time you need new credit to avoid headaches.
Alternatives to Freezing Your Credit
If you want identity theft protection but find credit freezes inconvenient, here are two alternatives to consider:
Fraud Alerts – Fraud alerts don’t block access to your full credit reports, but do add a warning for lenders to verify your identity before opening new accounts. Fraud alerts last for one year and involve fewer lift requests when applying for credit.
Credit Monitoring – Credit monitoring services notify you of any changes to your credit reports and suspicious activities like new account applications without your consent. Some include fraud insurance. The downside is the monthly fees associated with most monitoring services.
Fraud alerts and monitoring provide notification of potential identity theft issues but lack the access blocking effect of a full credit freeze. Weigh the pros and cons of each option for your needs.
Frequently Asked Credit Freeze Questions
Here are answers to some common credit freeze questions for a deeper understanding:
Does freezing my credit affect my credit score?
No. Freezing your credit does not lower your credit score or have any impact on active accounts. It only prevents new accounts from being opened by blocking report access.
Can I still use my credit cards if my credit is frozen?
Yes! You can continue using existing credit and debit cards normally with a freeze in place. It only stops lenders from accessing your credit reports to open brand new accounts.
Is it difficult to lift a credit freeze?
It’s easy to do online or by phone, just less instantaneous. You simply log in to your freeze account with each bureau to request a temporary or permanent lift. Processing times are typically an hour or less.
Can my spouse freeze my credit for me?
Unfortunately no. Every individual has to contact each credit bureau themselves to freeze access to their own credit reports. The one exception is military members appointing a spouse as power of attorney.
Can employers do background checks if my credit is frozen?
It depends on the nature of the background check. Most employers only check identities and criminal records. But financial industry roles may require a soft credit check, in which case you‘d need to temporarily lift the freeze during your application.
How long does a credit freeze last?
A credit freeze remains on your account indefinitely until you request it to be lifted or removed. It essentially lasts forever unless you proactively have it thawed.
Take Control by Freezing Your Credit
Freezing your credit is one empowering way to defend against the prevalent threat of identity theft. By proactively locking down access to your credit reports, you can prevent criminals from committing fraud in your name. Implement a carefully managed credit freeze to stop thieves in their tracks without majorly disrupting your legitimate credit needs. Your financial wellbeing and peace of mind will thank you.