How to Freeze Your Credit: Everything You Need to Know

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Perhaps you’ve heard that putting a freeze on your credit is effective protection against credit fraud and identity theft. Still, you may be unsure what exactly a credit freeze truly entails and if freezing your credit is right for you. We have all of the details you need: what a credit freeze is, how to freeze your credit, and the cost and time involved. Use this information to make a decision on whether or not you want to proceed with credit freezing.

Credit freezes have been an option for over a decade and they’re used for a number of reasons. When sensitive information is lost or compromised, it provides an opportunity for people to pretend to be you. This means someone can take out a line of credit or apply for a loan under your name without your knowledge or approval.

If you’ve ever been involved in a data breach, if someone has tried to steal your identity, or if you’ve lost important documents like your driver’s license or social security card, you’ve probably been told to consider freezing your credit for extra security. Even if you’re not a victim of identity theft or a data breach, you may want to consider freezing your credit to ensure your information remains as safe as possible. Because your credit score is one of the three main factors that impact your financial health, it’s important to do everything you can to protect your credit.

What Is a Credit Freeze?

A credit freeze prevents an institution like a loan or credit card company from accessing your credit file. Freezing your credit doesn’t limit you from applying for a credit card or taking out a mortgage, but you will be required to personally unfreeze your account to allow access to your credit file before doing so.

In most cases, creditors must review a credit report before they grant approval for a new account. In other words, a credit freeze prevents someone else from opening up a line of credit under your name. When you want to apply for a loan or credit card, you can “thaw” your credit file to allow that institution access.

Fortunately, credit freezes don’t affect your credit score. That’s right—putting a freeze on your credit won’t lower or raise your score. Your information remains available to existing creditors and debt collectors along with government agencies who may have access due to a court order, subpoena, or search warrant; however, any new lenders and creditors are unable to access your credit report. That’s why you would need to temporarily unfreeze your credit before receiving approval from a new lender.

7 Things to Consider Before Freezing Your Credit

To make an informed decision on whether or not to freeze your credit, make sure you understand what’s involved. These seven components will give you insight about the time and cost of freezing your credit, along with the advantages and disadvantages of doing so.

#1: It Takes Time to Freeze and Unfreeze Your Account.

Freezing your credit generally takes 60 minutes or less for all three major credit bureaus (Experian, Equifax and Transunion) if you’re using their online option. When you want to apply for a credit card, take out a mortgage, or borrow money for a new car, you’ll have to contact the credit bureaus to unfreeze your account. Depending on how you choose to unfreeze your file, the unfreezing process could take anywhere from 10 to 30 minutes to complete for all three bureaus.

Consider how often you apply for new credit each year. If you do so fairly infrequently, your time commitment to freezing and unfreezing your accounts will be relatively small.

Pro tip: When freezing your credit, you’ll receive a PIN from each of the three credit bureaus. Keep your PINs in a safe, handy location for easy access and faster unfreezing in the future.

#2: A Small Financial Cost May Be Associated.

Freezing and unfreezing your credit is either free or of low cost. If you’re a victim of fraud, freezing your credit might be free, depending on your state’s law. In other cases, you may have to pay a small fee that’s usually between $3-10 per freeze per bureau. If you only apply for new credit a couple of times per year the cost is minimal, especially compared to the potential financial loss of someone utilizing your identity to take out a mortgage or credit card.

Pro tip: When applying for credit, ask the lender which credit bureaus they utilize for their credit checks. If they only use one or two of the bureaus, you’ll only need to unfreeze those accounts, which can save you time and money.

#3: The Process to Freeze and Unfreeze Is Surprisingly Straightforward.

Each of the three credit bureaus have their own steps and processes for freezing and unfreezing your credit. On their websites, you’ll receive clear direction on how to complete the process. Once you have frozen your credit, you’ll only need to unfreeze your account when you’re applying for a credit product such as a credit card, loan, or mortgage.

Pro tip: Each credit bureau offers a free credit report once a year by law, meaning you can receive three free reports annually. We recommend taking advantage of free credit reports, which allow you to see your credit history and any open lines of credit. By reviewing your report, you can ensure there are no unknown lines of credit in your name or other errors.

#4: Freezing Your Credit Can Give You Peace of Mind.

Rather than worrying that your personal details could be used without your knowledge, you’ll feel secure knowing that no one can open new credit under your name. If you’ve been a victim of identity theft or a data breach, this is especially important.

Pro tip: If you’ve been a victim of fraud or identity theft—or you want to prevent either of these events from happening—think about freezing your credit now as instead of waiting.

#5: But Remember, a Credit Freeze Doesn’t Protect You From All Forms of Fraud.

Putting a freeze on your credit locks your credit file, but it doesn’t protect you from all types of fraud and identity theft. For example, if someone steals information on a current credit account, your credit could be used without your permission.

Pro tip: Take your security a step further by signing up for credit monitoring which helps spot identity theft through 24/7 credit monitoring.

#6: The Length of a Credit Freeze Depends on Your State.

In some states, credit freezes expire after seven years, meaning you’ll have to reinstate your freeze once the time lapses. In other places, the freeze remains indefinitely unless you request that your file be unfrozen.

Pro tip: Set an electronic calendar reminder for seven years from the day you freeze your credit. Include a note to check your credit files to determine if they are unfrozen, reminding yourself to refreeze them if desired.

#7: Overall, a Credit Freeze Is an Inexpensive, Effective Method of Protection.

Freezing your credit is one option for extra security and assurance. It could save you from the large potential financial risks that identity theft can cost you. Even if you have to freeze and unfreeze your credit several times a year, the cost is relatively low for the protection of your financial assets and identity.

Pro tip: Consider freezing your credit for one year. Keep track of how much time and money it costs you along with the security and peace of mind it provides. If freezing your credit ends up not being the right choice for you, you can always unfreeze it.

How to Freeze Your Credit

Freezing your credit is relatively simple. If you find yourself asking “How do I freeze my credit?” —have no fear! The process can be completed in a few simple steps, and usually can be completed in under an hour.

First, make sure to freeze your credit at each of the three major credit bureaus below. The fastest and most convenient process is the online option, but you can also freeze your credit via phone or mail.

You will receive a PIN from each bureau when you freeze your account. Keep your PINs in a secure spot where it won’t be misplaced or stolen. Having your PINs available in the future will make unfreezing your credit easier and faster. The cost for each freeze or unfreeze depends on your state’s law and whether or not you’re a victim of a data breach or identity theft.

Experian: Freeze your credit online, by phone at 888-397-3742 or by mail:

Experian

PO Box 9554

Allen, TX 75013

Equifax: Freeze your credit online, by phone at 800-349-9960 or by mail:

Equifax Security Freeze

P.O. Box 105788

Atlanta, Georgia 30348

TransUnion: Freeze your credit online, by phone at 888-909-8872 or by mail:

TransUnion LLC.

P.O. Box 2000

Chester, PA 19016

How to Unfreeze Your Credit

To temporarily or permanently unfreeze your credit, you’ll need to contact each of the credit bureaus above. The fastest way to unfreeze your account is to request it online using the PIN you received when you froze your credit. You can also call each bureau or mail your “thaw” request to the contact information above.

Overall, freezing your credit can provide you with extra security and peace of mind, especially if you’ve lost sensitive information or been a victim of a data breach. When deciding whether to freeze your credit, consider the time, money and other factors involved, just like any financial decision. While freezing and unfreezing your credit can seem like a hassle, it could save you hours of time and plenty of money should anyone steal your information and apply for credit without your knowledge.

Want to build positive credit and financial stability? Learn more about your credit score.

Sources: Federal Trade Commission | Mint | CNBC

 

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