The Complete Guide to Freezing Your Credit

You may have heard the expression “credit freeze” from some of your friends. This concept is popular in the US, but credit bureaus also exist in some parts of Europe.

 

So, what exactly does it mean? In this post, we’ll learn about credit, how to do a credit freeze, and their possible repercussions.

What is a credit?

Credit is one's ability to access goods or services, granted you will be paying later. Creditors such as lenders or merchants grant credit based on your ability to pay back what you borrow, plus interest. And they base the amount of credit you can access from reports submitted by banks, credit unions, and credit card issuers.

 

This information is compiled on your credit report, which is then assessed by independent bureaus such as Experian, TransUnion, and Equifax. If these creditors find you trustworthy, you will be of "good credit" and able to borrow a certain sum of money.

 

Who can access your credit?

Your credit details can be found in your credit report, and accessed by several people and entities, including:

  • Credit agencies
  • Card issuers
  • Lenders or loan providers
  • Banks
  • Utility companies
  • Landlords
  • Employers
  • Collection agencies
  • Government agencies
  • Anyone with a court order

What is a credit freeze?

When you are freezing your credit, what does it mean? In principle, a credit freeze simply restricts access to your credit report.

 

That said, there are still people who can still access your credit after it has been frozen: your existing creditors, debt collectors, and government agencies if they have a search warrant or subpoena.

 

What happens when you freeze your credit?

Are there do’s and don’ts when you freeze your credit? It’s more like, what you still can and cannot do:

What you can still doWhat you cannot do
  • Get your free annual credit report.
  • Open new accounts, given you lift the freeze temporarily.
  • Apply for new jobs.
  • Rent an apartment.
  • Buy insurance.
  • Prevent thieves from making charges to existing accounts. You need to continue monitoring your accounts for this.
  • Stop prescreened credit card offers.
  • Open new lines of credit or accounts requiring a credit check. The good thing about this is criminals cannot open a credit line too.
  • Apply for a loan or a new line of credit.

What are valid reasons to freeze your credit?

If freezing your credit is a bit of a hassle, is it worth doing it? What are the most common reasons why people freeze their credit?

  • If you suspect you may be a victim of identity theft. When a criminal has the necessary information needed to access your credit, they can steal your identity. While committing identity theft, they can do a lot of things such as getting hold of your social security benefits, opening bank accounts, taking out a mortgage, etc.
  • If you have all the credit you need. Senior citizens may not require credit anymore but they are also more prone to being victimized by criminals. Since they have racked up a lot of credit and net worth during their working years, they become attractive targets to criminals. In fact, a report by CNBC in 2019 states how scams cheat older Americans out of almost $3 billion a year.
  • If you are involved in a messy breakup or divorce. If your former partner knows your private information and is able to  access your credit and open new accounts using your identity, then freezing your credit may stop them from doing so.

What is the difference between a credit lock and a credit freeze?

Though very similar, the difference between a credit freeze and  credit lock is the method of restriction and cost.

 

For credit locks, your credit reports can be locked and unlocked in real-time without a PIN or mobile device. While a credit freeze is free for anyone who wants to use it, a credit lock is a special service offered by credit bureaus. These bureaus charge around $25 for this service, including credit monitoring and alerts.

 

What’s the difference between a credit freeze and a fraud alert?

Both a credit freeze and a fraud alert are instruments to help you when your identity is in danger of being stolen. While a credit freeze makes your credit inaccessible, a fraud alert allows creditors to get a copy of your credit report after your identity has been verified.

 

However, you must bear in mind that fraud alerts can prevent criminals from opening new lines of credit but they cannot stop the misuse of your existing accounts.

 

How much do credit freezes cost?

Before, it used to cost $10 per agency for your freeze to be successful. Now, credit freezes are free. They are also free for children under 16. You can also get a freeze for another person if you are their attorney, guardian, or conservator.

 

Does a credit freeze affect my credit score?

No, a credit freeze doesn’t affect your credit score because the government and credit agencies recognize the importance of freezing one’s credit, especially if they’re under threat of identity theft.

What you need to know before freezing your credit

Are you considering freezing your card? Here are some of the things you need to consider before doing so:

  • Know what happens during a credit freeze. You’re taking the first step by reading our blog post! Freezing your credit is a big step and only something you should do when you feel properly informed.
  • Understand the credit freeze process. The processes for the top three credit agencies are listed here (keep scrolling!) but if you’re using a lesser known credit agency, you have to go to their website and read about their own process there.
  • Credit freezes are not fool-proof. If you’re targeted by hackers or identity thieves, freezing your credit will make it harder for them to access your files.
  • Your rights as someone applying for a credit freeze. You need to know you are entitled to this free service and can lift your freeze anytime. If you’re also wondering how long a credit freeze lasts, you’ll be delighted to know they don’t have an expiration date.
  • You may experience credit delays. If you need your credit report right away or you want to apply for a loan, you need to go through certain processes instead of being able to enjoy immediate access.  

How do I place a freeze on my credit reports?

When freezing your credit reports, you need to contact three agencies, namely Equifax, Experian, and TransUnion. Be prepared to give your personal details such as name, address, date of birth, and Social Security number.

 

Once you have submitted your information, you will be given a unique identification number and password. You will need these later on should you want to stop the credit freeze. For some of the agencies, you won’t need a PIN at all.

 

How to do an Equifax credit freeze

You can request to freeze your Equifax credit by:

  1. Using myEquifax online account. This handy portal allows you to request a security freeze and check its status as well.
  2. Mailing the Equifax freeze credit form. If you prefer the good ol’ trusty snail mail, you can also download the freeze credit form. Fill it out, and send it to: Equifax Information Services LLC, P.O. Box 105788, Atlanta, GA 30348-5788.
  3. Calling the Equifax freeze credit hotline at (888) 298-0045. If you want to request your credit freeze over the phone, you have to be prepared to give personal details. You should ensure to take the call in a secure and quiet place where no one can eavesdrop on you. When you opt for this method, you will also be given a one-time PIN (personal identification number) via text message to verify your information.

How to do an Experian credit freeze

You can request to freeze your Experian credit by:

  1. Completing this freeze credit form online. This no-frills online application requires several pieces of personal information from you, including your Social Security number. On this form, you also need to either provide a PIN or request for a PIN, which you will need to use the next time you want to access your Experian credit account.
  2. Calling Experian at 1-888-397-3742. You will need to provide the same details as the online credit form. You will also need to provide additional verification to confirm your identity.

How to do a TransUnion credit freeze

You can request to freeze your TransUnion Experian credit by:

  1. Creating an account on the TransUnion website. TransUnion urges their members to use their online accounts where they can add, remove, or temporarily lift their free credit freeze. With this portal, they can also start a dispute and edit personal details on your credit report. Another thing TransUnion members can do on the website is add or remove a consumer statement on their credit report.
  2. Calling TransUnion for urgent requests at 1-888-909-8872. Similar to the other credit agencies, if you don’t want to place your credit freeze online, you can also call the TransUnion hotline.

How to freeze your credit for free

Before 2018, you had to pay a certain amount to freeze your credit. However, after the government acknowledged the importance of freezing one’s credit (and with data breaches happening everywhere!) it has been mandated that it should be free to whoever may request it.

 

Simply follow the steps mentioned above to freeze your credit for free. Credit agencies also offer credit lock, another solution to protect your credit, which comes with a minimal fee.

 

How to freeze your credit abroad

If you are outside America, it is recommended you use the online portal of your credit agency to freeze your credit. If you are going on a planned trip or migrating outside the US, it would be better to freeze your credit while you are still in America.

The pros and cons of freezing your credit

While freezing your credit may seem like a good idea to protect yourself against identity theft, it also has its downsides. Here are the advantages and disadvantages of a credit freeze.

Pros:

  • Makes your credit inaccessible, reducing the chance of criminals creating fraudulent credit accounts in your name.
  • Your credit report is more secure and you can sleep more soundly knowing this.
  • It won’t affect your credit score
  • You can still use your existing credit accounts
  • It’s free and it’s your right as a consumer
  • Credit freezes prevent you from applying for  new credit on a whim.
  • Credit freezes don’t “expire” but you can still lift your freeze when you change your mind.

Cons:

  • It doesn’t provide 100% protection. Though putting on a credit freeze lowers the chances of identity theft, fraudsters can still gather pieces of information about you using other means.
  • It is not easy freezing your credit. You need to contact each of your credit agencies and do the same when lifting the freeze. There is no joint portal to do a blanket freeze.
  • You cannot open a new credit account for a mortgage, credit card, loans, etc. If you want to do so, you may request to temporarily lift the freeze or you need to do it before freezing your credit.

How do I lift a freeze?

When requesting to temporarily lift or permanently remove a security freeze, you'll need to contact your credit provider again and provide documents to validate your identity. For some of them, it’s as easy as logging into your online account and clicking a button!

 

And while your freeze is lifted, double up on your protection and make sure you have a cybersecurity app to protect your credit and identity. Try Clario which also alerts you every time there is a potential security breach or suspicious activity regarding your accounts.

Read more:

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