When you think of freezing, credit may not be the first word that comes to mind. But knowing how to freeze your credit can save you from the pain of identity theft.
It is a free and effective way to protect their credit from fraud, and a smart option for someone who is not actively looking for a credit card or credit.
It gives peace of mind to anyone who worries about identity thieves opening new lines of credit on their behalf.
While credit freezing does not guarantee that a customer will never be a victim of fraud, it does provide a convenient and easy to set up protection for consumer credit.
In this world where any access to your credit card and any online transaction could put your information in the hands of identity thieves, a credit freeze doesn’t seem like the worst idea.
It will deter scammers from opening new lines of credit on your behalf, while still allowing you to borrow and new lines of credit if necessary.
What is Credit Freeze?
A credit freeze, also known as a security freeze, is the best way to prevent new accounts from being opened on your behalf.
Freezing and releasing your credit is absolutely free, and it doesn’t affect your creditworthiness.
A credit freeze is something you can put in place to prevent others from seeing your credit reports, including lenders.
Freezing your credit is an extreme step, but it may be required if you are dealing with identity theft and other measures such as fraud alerts have not been effective for you.
What a credit freeze does is simple: it protects customers by freezing access to their credit reports.
When a consumer applies for a line of credit such as a credit card or a home credit, a lender or card issuer usually checks the customer’s creditworthiness before making a decision.
However, if the credit report is frozen, the prospective creditor will not be able to access the information necessary to approve the application.
How does credit freeze work?
If you want to freeze your credit, you need to contact the three credit bureaus and let them know of your request.
They will essentially freeze your credit reports so that new creditors cannot see them unless you give them the special PIN the credit reporting agencies give you. Your existing creditors will still have access to your reports.
The freeze will remain on your credit report until you contact the credit reporting agencies and request that it be removed. Freezing your credit won’t harm your creditworthiness, although it could make it harder to obtain new credit.
What to Know Before Freezing your credit
Freezing and releasing your credit can be done in minutes with any credit bureau (Experian, TransUnion, and Equifax), but that doesn’t mean you shouldn’t take this lightly. Here are six things that you should understand before starting the process:
1. Know what a credit freeze is
A credit freeze is a tool that consumers can use to protect themselves against credit fraud. If you freeze your credit reports, most companies will be prevented from viewing them until you “thaw” the freeze.
If lenders can’t see your credit report, they can’t issue credit. This means that if someone succeeds in stealing your Social Security number and other personal information, they cannot open fraudulent credit accounts on your behalf.
However, a credit freeze also makes it impossible for you to obtain credit approval unless you remove it temporarily or permanently.
2. Understand the process of credit freezing
You must apply for a credit freeze to all three major credit bureaus for it to be effective. During the process, you’ll need to answer a handful of questions to confirm your identity.
You will also need to provide your social security number, a copy of your photo ID, and proof of residence, e.g. a recent electricity bill.
Depending on the office, you may receive a PIN that you can use to freeze and re-release your report in the future.
If you are planning on applying for credit with a security freeze on your credit reports, you will need to either temporarily or permanently remove the freezes before submitting an application to ensure that the lender can see your reports during their credit check.
3. You Can Freeze Your Credit for Free
There are no charges for freezing or thawing your credit. Until recently, credit freezing fees were charged that varied by state, but now they’re free regardless of where you live in the United States.
It’s also free whether you’ve been a victim of identity theft. In the past, victims of identity theft may have had their fees waived, but now credit freezes are free for everyone.
4. Know that freezing doesn’t protect everything
A credit freeze can prevent someone from committing credit fraud by opening a credit account on your behalf without your permission.
However, it cannot protect you from your identity being stolen.
A credit freeze has never prevented identity theft. Their purpose is to prevent your stolen identity from being used to commit fraud against you.
If someone steals your credit card number, they can still use your credit account to make unauthorized purchases.
Even if someone steals your Social Security number, a credit freeze won’t stop them from filing fraudulent tax returns and health insurance claims on your behalf.
Therefore, it is important to remain vigilant in other areas of your financial life, especially when you are certain that someone has stolen your personal information.
5. Explore your other options
There is usually no need to freeze your credit if you’ve never been a victim of identity theft or fraud. If you believe your data has been compromised, a fraud warning may be enough.
It will let lenders know to verify that the applicant is really you before opening a new account, while still allowing you access to credit when you need it.
The exception is instant credit – as lenders take additional steps to verify your identity if there is a fraud warning, you may find that stores are unable to immediately approve you for credit.
The choice between a fraud alert and a credit freeze is yours. A fraud warning is better if you fear that your data has been compromised but there is still no evidence of fraud, or if you want to protect yourself but want to apply for credit in the near future and don’t want to do business with freezing and thawing your credit.
If you’ve become a victim of identity fraud despite receiving a fraud warning, a credit freeze can help.
How to Freeze Your Credit for Free
You’ll want to place a free credit freeze on all three of your credit reports, including from Experian, Equifax, and TransUnion. That said, the process can vary from agency to agency.
They all maintain dedicated web pages where you can set up credit freezes.
When you apply for a credit freeze online, the office may provide or have you create a personal identification number (PIN) or password to be used to thaw or reactivate your freeze.
If you need to withdraw your credit in the future, you can do so by visiting or calling your online account at any Schufa.
Applying for a credit freeze usually doesn’t take too long and can be completed in around ten minutes per office. Here’s how the customer should start the process with each office:
How to Freeze credit with Equifax
Customers can freeze their Equifax credit online at their website or by calling 800-349-9960.
How to freeze credit with Experian
To initiate the Experian credit freeze, customers should either visit their online Safety Stop Center or call 888-EXPERIAN (888-397-3742).
How to freeze credit with TransUnion
TransUnion also allows anyone to put a credit freeze online on their website or by calling 888-909-8872.
All written inquiries should include:
- Your full name including middle initial (and generation)
- Social Security Number
- Complete addresses for the last two years
- Birth date
- A copy of a government-issued ID card, such as a national ID card. B. Driver’s license, ID card, etc.
- A copy of a utility bill, bank or insurance statement, etc.
Make sure each copy is legible and includes your name and current mailing address and the date of issue. Send copies of any documents you wish to provide to us and always keep your original documents.
How can I lift a credit freeze?
The same websites that were used to set up credit freezes can be used to remove or suspend them.
All three offices also offer instructions on how to unfreeze a phone over the phone using the password or PIN associated with your freeze in each office.
In addition to your ability to permanently unfreeze your funds, you may have the option to temporarily unfreeze, either by granting one-time access to a specific creditor or by specifying a length of time (a day, a week, etc.) you would like the freeze to be suspended will.
The guidelines vary by office, so make sure you understand your options before starting the process.
If you enter your password or PIN online or over the phone, your credit will be thawed within an hour.
If you lose your password or PIN, the credit bureaus will have to verify your identity, which will delay the process.
The freeze request asks customers to answer questions to verify their identity.
They will also need to provide their personal information including their name, date of birth, social security number, a copy of photo ID, an address, and proof of residence (such as a recent utility bill).
Depending on the office, customers may be given a PIN that they can use to freeze and unfreeze the report again in the future if necessary. This PIN should be treated like any other sensitive information and kept in a safe place.
Does a Credit Freeze Affect Your Credit Score?
A credit freeze will not affect your creditworthiness or your current credit accounts. While a credit freeze does not affect your creditworthiness in any way, it does affect your ability to qualify for a credit or credit card unless you thaw your credit before submitting your application.
If you choose to temporarily unfreeze it, make sure you have enough time to complete the credit application and subscription process.
What are the cons of a credit freeze?
Freezing your credit has several drawbacks that most people are not aware of. Here are a few things you should know before making that call.
Since a credit freeze prevents most lenders and service providers from getting your credit report, you must unfreeze the freeze before submitting a new credit application.
Freezing your credit report just as a preventative measure can cause inconvenience. Before applying for a credit freeze, there are a few things to keep in mind and consider alternatives.
Every time you want to check your credit reports yourself or allow a lender to do so, you will need to provide your PIN.
If you keep losing sight of this number, your creditors will not be able to see your report and will likely reject your application because they cannot assess your creditworthiness.
You can still get your credit freeze temporarily or permanently, but you will need to go back to the credit bureaus and fill out additional paperwork to prove you are not an identity thief.
Perhaps the biggest downside to credit freezes is that all the hassle may not stop identity thieves. While suspension will most likely prevent you from opening new accounts on your behalf, it cannot prevent fraud on your existing accounts.
For example, if thieves get their hands on your credit card number, they may still collect a variety of charges on your behalf, credit freezing or not.
When to consider a credit freeze
Credit stops don’t work well for most people. Unless you’ve been the victim of widespread identity theft – that is, someone tried to file a tax return and opened several new accounts on your behalf – a credit freeze probably isn’t worth all the hassle.
If only your credit card was stolen from you or the thief only opened a single account, you can likely handle it without a credit freeze.
Notify the financial institution and credit reporting agencies to have the fraudulent accounts removed from your credit report. If it is a simple credit card theft, your card issuer will likely simply cancel the card and send you a new one.
If your identity has been stolen, it’s always a good idea to get your credit reports and look for other fraudulent accounts that may have been opened on your behalf. If you feel it necessary, you can include a fraud warning on your credit reports.
Unlike credit freezes, fraud alerts are free and you don’t have to remember a special PIN. Instead, they put a warning on your credit reports notifying creditors that they should take additional steps to verify your identity before approving new credits or lines of credit.
You can add a fraud warning to your credit reports by contacting and requesting credit reporting agencies. The notification will last for 90 days from the date it was first placed on your report, and then it will expire. You can extend it if you wish.
Credit freezes can protect you from identity thieves, but that security comes at a price. For most people, it’s not worth it. Instead, closely monitor your credit reports for fraudulent activity and instead include a fraud warning on your report if you see any.
How to Freeze Your Child’s Credit
Parents and legal guardians can freeze the credit of a child under the age of 16. If you request a freeze for your child, Schufa must create a credit file for the child and then freeze it.
In addition to the information required to freeze the adult credit, you will need the child’s birth certificate and proof that you are eligible to freeze the child’s credit.
Conclusion
Freezing your credit is an important step in protecting yourself against identity theft. While it doesn’t guarantee that you will never be a victim of fraud, it can give me some peace of mind. The process is quick and free to implement, so there is no financial reason to avoid a credit freeze.
References
- How to Freeze Your Credit – NerdWallet
- Security Freeze | Freeze or Unfreeze Your Credit | Equifax®
- How To Freeze Your Credit – Forbes Advisor
- What To Know About Credit Freezes and Fraud Alerts|consumer.ftc.gov
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