Safeguarding your credit is crucial as it significantly impacts your financial well-being. Considering a credit freeze can be a prudent security measure to prevent unauthorized individuals from accessing your credit file. Understanding the ins and outs of credit freezes is key to determining when it’s a wise decision.
What Is a Credit Freeze?
A credit freeze, also known as a security freeze, empowers you to limit access to your credit reports. By freezing your credit, you can deter identity thieves from applying for credit in your name, especially if it necessitates a hard inquiry on your credit reports.
Although a credit freeze restricts general access to your credit history, companies with an existing credit relationship with you can still view your credit file. Additionally, government agencies with a court order or search warrant can access your credit information even when a freeze is in place.
It’s important to note that a credit freeze does not stop you from receiving prescreened credit offers; you must opt-out separately to halt these solicitations.
How a Credit Freeze Works
When you freeze your credit with Equifax, Experian, and TransUnion, you inform them that you want to limit access to your credit file. However, there are exceptions to who can still access your credit report during a freeze.
You have the autonomy to keep a credit freeze for as long as you wish, and thanks to a 2018 legislative change, freezing and unfreezing your credit is now free. Unlike the past, there is no longer a fee associated with implementing a credit freeze.
Credit freezes do not impact your credit score and do not hinder you from accessing your free annual credit reports. However, if you intend to apply for credit or loans, you must lift the freeze to grant creditors access to your file. Notably, lifting a credit freeze is unnecessary for activities like job applications or apartment rentals.
How to Freeze Your Credit
To freeze your credit, contact each major credit bureau individually. Below are the contact details for Equifax, Experian, and TransUnion:
- Equifax: Online at Equifax Freeze or by phone at 800-685-1111
- Experian: Online at Experian Freeze or by phone at 888-397-3742
- TransUnion: Online at TransUnion Freeze or by phone at 888-909-8872
Provide each credit bureau with essential details like your name, address, date of birth, Social Security number, and other personal identifiers to initiate a credit freeze. While Experian and TransUnion mandate a unique PIN for freezing and unfreezing credit, Equifax does not.
Freezing your credit with all three bureaus is imperative to secure your credit reports fully, and the freeze remains effective until you choose to lift it.
Notably, freezing your credit reports does not freeze your credit scores, which can still fluctuate based on reported information during a freeze.
How to Unfreeze Your Credit
At some point, you may need to unfreeze your credit, whether permanently or temporarily for credit applications like a mortgage or credit card.
Contact each credit bureau individually to unfreeze your credit reports. For TransUnion and Experian, you’ll need to provide the previously set PIN for verification.
Once a request is made to lift the credit freeze, the bureau must unfreeze it promptly should the request be online or by phone, typically within an hour. Mail requests for unfreezing should be processed no later than three business days upon receipt.
Pros and Cons of Freezing Your Credit Report
Freezing your credit reports entails advantages and disadvantages worth considering. Here’s a balanced look at the pros and cons if you are contemplating a credit freeze.
Pros:
- Secures your credit report to help prevent identity theft and fraud
- No longer incurs fees for freezing or unfreezing credit
- Effortlessly freeze or unfreeze credit online
- A credit freeze does not impact your credit score
Cons:
- A credit freeze doesn’t entirely block access to your credit file
- You must unfreeze your credit before applying for new credit
Opting for a credit freeze is prudent if you are wary of identity theft and not planning on seeking additional credit soon. It adds an extra layer of protection to your credit reports, particularly crucial as fraud and identity theft instances rise. Furthermore, the absence of fees to initiate or lift a credit freeze is a welcomed benefit. However, there are alternative methods to shield your credit history from unauthorized access.
Credit Freeze vs. Fraud Alert
Another strategy besides credit freezes is to deploy a fraud alert on your credit profile. A fraud alert offers protection against unauthorized credit access for a year, extendable to seven years with an extended fraud alert.
Extended fraud alerts may be preferable for those who have previously fallen victim to identity theft. To establish an extended fraud alert, create an identity theft report first, then contact one of the major credit bureaus to implement the alert, which should be relayed to the other two bureaus.
While not as stringent as a credit freeze, fraud alerts require creditors and lenders to verify your identity before granting new lines of credit. This could be a simpler alternative if you prefer not to freeze and unfreeze your credit file regularly.