Have you wondered, "Should I freeze my credit?". Well, 47% of Americans were victims of identity theft in recent years. And the single most common method of identity theft involves the identity thief opening a new credit account in the victim's name.
Unfortunately, there's no way to fully protect against identity theft. Which can leave many people wondering if a credit freeze is a good idea.
If you have a social security number, you run the risk of someone using it for their own personal gain. But the federal government has tools in place, including credit freezes, to help Americans secure their finances.
What is a credit freeze?
A credit freeze - also known as a security freeze - is a tool that restricts access to your credit report. They are a sort of lock designed to prevent identity theft, as people won't be able to open new accounts using your name and social security number.
These are often used to help prevent or respond to a data breach and identity theft. Some people choose to leave their credit frozen all the time, only doing a temporary lift when they want to apply for credit.
Others may freeze their credit when someone has already accessed their private information to prevent them from opening new accounts.
It's important to note that a credit lock is a similar option, but unlike a freeze, it isn't always free, and it's easier to undo.
What happens when you freeze your credit?
If you choose this route, what happens when you freeze your credit? When you do this, lenders can't run credit checks. However, current creditors and some government agencies can still see your credit report.
Whenever the lock is engaged, potential creditors can't access it. And when lenders can't run a credit check, they can't extend a new credit line. Only when you decide to "thaw" your credit will lenders be able to access it again.
Also, note that you can still use your existing credit cards and accounts during this time.
Should you freeze your credit? Pros and cons
Now you know what happens when you freeze your credit. Before initiating this, it's important to understand the implications.
Is freezing your credit a good idea? And should you do it? While there are many advantages to doing this, there are also some downsides to keep in mind.
Find out if it will improve your money situation.
Here are the benefits that you should consider if you're wondering, "should I freeze my credit?"
Your risk of identity theft is reduced
The biggest pro of this option is that it prevents someone else from opening an account with your information. Which helps to reduce the risk to your finances.
It doesn't cost anything
It used to be that this came with a fee. But now, all three credit bureaus allow you to put a free credit freeze in place.
Your credit score won't be impacted
A credit freeze has no impact on your credit score. It also doesn't prevent you from checking your credit report.
A credit freeze does not expire
Once your credit is frozen, you can leave it until you're ready to unfreeze it. Freezes don't expire, so you won't have to update or re-freeze often.
It prevents impulse decisions
Taking an action like this is primarily intended to prevent identity theft. But it can also help prevent you from impulsively opening new credit accounts. Depending on your money circumstances, this could be a good idea.
There are some downsides to the question, "should I freeze my credit?". Here are the things to remember as you decide.
They aren't 100% effective
It doesn't prevent someone from ever opening another account. Assuming you unfreeze your credit eventually, someone who has your personal information could still do damage.
Existing accounts are not protected
Credit freezes prevent people from opening new accounts with your information. But they don't prevent criminals from using your current accounts nefariously.
You need to contact each agency separately
When you're wondering, "should you freeze your credit", you should know that there's no way to freeze your credit with every agency at once. Instead, you have to go through the process with each of the three bureaus separately.
You need to plan ahead for new credit accounts
Anytime you need to apply for credit, you'll have to unfreeze your credit. It could require some planning ahead if you want to open a new line of credit.
You may even have to plan ahead to purchase insurance, as insurance companies typically run your credit to determine your rates.
How to do a credit freeze and credit lift at each of the bureaus
To freeze your credit, contact each of the three major credit bureaus, Equifax, Experian, and TransUnion:
Equifax credit freeze
When you want to start an Equifax credit freeze, you can do it in a few ways. If you don't mind creating an account, you can do this online.
Or by mail, if time isn't too important. Otherwise, contact them by phone.
Equifax: Call 888-298-0045 or visit the website.
Experian credit freeze
It's also very easy to do an Experian credit freeze. Simply make an account and handle it online or by mail or phone.
Experian: Call 888-397-3742 or see the website for details.
TransUnion credit freeze
A TransUnion credit freeze is very similar to the others. Create an account online, and make freezing super fast by using the website or calling.
- TransUnion: Call 888-909-8872, or the website is also available.
To initiate the freeze with the credit bureaus, you'll need to share your name, address, date of birth, and social security number. You'll also get a unique PIN or password, which you'll need to provide when you choose to lift the freeze.
How to unfreeze your credit AKA a credit freeze lift
A freeze remains in place until you decide to lift it. To do so, you'll need the PIN or password that you established when you initially froze your credit.
To unfreeze your credit, contact each bureau and request that they undo this. If you make the request by phone or online, the bureau must lift the freeze within one hour. Here are the phone numbers by credit union:
- Equifax credit freeze lift: Call 888-298-0045
- Experian credit freeze lift: 888-397-3742
- Transunion credit freeze lift: 888-909-8872
You can also make the request by mail, in which case the bureau has to lift the freeze within three days of receiving the request. Just like initiating a credit freeze, lifting one is free.
In some cases, you may only need to unfreeze your credit at one or two bureaus. When you apply for credit, a job, or an insurance policy, you can ask which specific bureaus they plan to use to check your credit. Then, you can just lift the freeze at those specific bureaus.
Credit Freeze Alternatives
A credit freeze can be a useful tool, but it's not entirely effective at protecting against identity theft. Additionally, people who apply for credit often may find it to be inconvenient. That said, here are a few options and alternatives you can consider:
Credit monitoring service
Many credit services monitor your credit report and alert you to changes in your credit score and changes to your credit report.
Because of the quick response, these services can help spot any potential identity theft early. Many companies offer this service for free e.g. your bank or credit card company, while others charge a fee.
A fraud alert is a tool that makes it more difficult for someone to open credit accounts in your name. It requires lenders to call you and verify your identity before extended credit. That way, you'll know if someone other than you tries to open an account in your name.
To place the initial fraud alert, simply call one of the credit bureaus - they're required to notify the other two. It will be free of charge and remain valid for one year.
Federal law also allows victims of identity theft to receive extended fraud alerts for seven years after the incident. An extended fraud alert makes it more difficult for businesses to extend credit to you - they must take extra steps to verify your identity and must remove your name from all credit marketing lists.
Regular credit checks
Regularly checking your free credit report allows you to make sure there's nothing on your report that shouldn't be. You can check to make sure there are no signs or proof of identity theft and that there are no errors.
Federal law guarantees that everyone can access their full free annual credit report at least once per year at AnnualCreditReport.com.
Is freezing your credit a good idea?
Is freezing your credit a good idea? After all, identity theft affects millions of Americans each year and is a concern for many people. Victims of identity theft often spend years trying to recover, both financially and emotionally.
So, the answer to "should I freeze my credit?" It's just one step in helping to prevent identity theft. But remember that it doesn't fully protect you, so it's important to pair a credit freeze with other tools available.
For more ideas about protecting your finances and saving money, see our articles at Clever Girl Finance.