The possibility of identity theft is at an all-time high, with the recovery process often being long and burdensome. Victims typically spend countless hours on the phone trying to reclaim their money and repair their credit status. This includes contacting the companies where the fraud took place and placing fraud alerts on all three credit reports. Fortunately, there’s a straightforward way to avoid this trouble.
A tool known as a credit freeze can spare you the hassle associated with identity theft by potentially preventing it before it occurs. Continue reading to learn more about how a credit freeze works and why it’s an essential measure for protecting your financial health.
What is a credit freeze?
A credit freeze (also known as a credit report freeze or security freeze) allows you to restrict lenders and credit card companies from accessing your credit information. This helps stop identity theft because it prevents anyone from applying for loans or credit cards until you lift the freeze.
For example, let’s say an identity thief submits a credit card application using your Social Security number. The credit card issuer will most likely try to access your credit history to gauge how likely you are to make your monthly payments.
If you have a credit freeze in place, they won’t be able to access that information. They will deny the identity thief’s application.
When you have a security freeze in place, there are still a couple of situations in which someone may access your credit report. Your existing creditors or their debt collectors can still access the information. Government and child support agencies who have received authorization from a court order, subpoena, or search warrant can as well.
However, since these companies and agencies aren’t associated with opening new lines of credit under your name, you don’t have to worry about identity theft in these situations.
What is a credit lock?
A credit lock is similar to a credit freeze. Credit locks allow you to restrict access to your credit file from most lenders. However, it allows you to unlock your credit report at any time. You can do it immediately on your computer or mobile device.
So, what’s the difference? The main difference is that it’s easier to unlock a credit lock than it is to unfreeze a credit freeze. This is because a credit freeze requires the use of a password-protected account or PIN.
Why a Credit Freeze Could Be Your Best Defense Against Fraud
Freezing your credit report is a smart move because it offers credit protection even if your personal information has been compromised. That being said, you should consider freezing your credit report even if you’re not aware of your personal information being stolen.
It’s an easy step to take care of in advance of potential identity theft and is important to do because you may not even know that your information has been stolen.
The Growing Threat of Security Breaches
Hackers are constantly attacking major companies around the world in an attempt to steal credit card numbers, Social Security numbers, and other personal data. To make matters worse, they may not even know about the compromised information until well after the attack has happened.
For example, 80 million members and employees of health insurance company Anthem had their Social Security numbers stolen in early December 2014.
However, Anthem didn’t even realize the data breach had occurred until late January 2015 and didn’t make any announcements for another week. That’s nearly two months when millions of consumers’ credit reports were available to identity thieves without them even knowing it.
Anthem eventually offered free credit monitoring services to members. However, having a simple security freeze in place would’ve provided an additional level of security, particularly during those first two months of ignorance.
How to Freeze Your Credit Report
To freeze your credit report, you must contact each of the three national credit bureaus (Equifax, Experian, and TransUnion) individually and request a freeze.
Each credit bureau will provide you with a unique PIN, which you can use to temporarily lift or permanently remove the freeze. Depending on your state, you may be able to freeze your credit report for free, or you may be charged a fee.
Your security freeze must be implemented within one business day if you make the request online or by phone. If you mail your request, it must be in effect no later than three business days after it is received, as required by law.
Freeze Your Credit Report Online
The fastest way to freeze your credit report is online, and you can do it directly on the credit bureau’s website:
Freeze Your Credit Report by Phone
Experian: 888-EXPERIAN (888-397-3742)
Freeze Your Credit Report by Mail
Equifax Information Services LLC
P.O. Box 105788
Atlanta, GA 30348-5788
Experian Security Freeze
P.O. Box 9554
Allen, TX 75013
P.O. Box 160
Woodlyn, PA 19094
See also: What Is a ChexSystems Security Freeze?
Credit Freezes Protect You Without Impacting Your Credit Score
Implementing a credit freeze does not affect your credit whatsoever. In fact, the only effect it has on your credit score is keeping it intact against potential threats from thieves.
A security freeze also doesn’t prevent you from receiving your free annual credit report from each of the three major credit bureaus. You can still request that information each year through AnnualCreditReport.com.
You’ll also still receive prescreened credit offers when you have a credit freeze in place. However, you can still opt out of those.
Credit freezes only restrict lenders’ access to your credit report. They do not in any way monitor your bank or credit card activity. So, you still need to keep an eye on those transactions to ensure there is no suspicious activity.
Many banks will often set up alerts to detect odd spending patterns in your financial accounts, but you shouldn’t strictly rely on them to keep track of your money. For example, identity thieves opening new accounts in your name and using current accounts are two separate crimes. Therefore, they must be monitored and treated differently.
Cost of Freezing Your Credit
Freezing your credit is now completely free. This change, effective from September 21, 2018, is thanks to federal legislation. It mandates that all three primary credit bureaus — Equifax, Experian, and TransUnion — allow you to freeze and unfreeze your credit reports without any fees.
This move aims to make credit protection accessible to everyone, ensuring you can safeguard your financial identity without worrying about the cost.
Lifting a Credit Freeze: How It Works
Adjusting your credit freeze for temporary access is simple. This step lets you undergo essential credit checks while maintaining overall protection.
Temporary Lift for Credit Checks
When you need to undergo a credit check — for a new loan, credit card application, or a job background check — you might need to temporarily lift your credit freeze. This process allows the necessary checks to proceed without permanently removing the protections you’ve put in place.
Remember, timing is crucial; initiating a lift a few days ahead of the check is wise, since the process can take up to three business days to complete. To streamline this, find out which credit bureau the inquirer will use and lift the freeze specifically with that bureau to save both time and effort.
Completely Removing a Freeze
If you decide to remove the credit freeze entirely, this action will permanently eliminate the protective freeze from your report. Whether you’re lifting the freeze temporarily or removing it for good, you’ll need the personal identification number (PIN) that was assigned to you when you first set up the freeze.
It’s vital to keep this PIN safe and secure, as you’ll need it to make any changes to your freeze status. Each credit bureau provides you with a unique PIN, so ensure you keep track of all three to manage your credit freezes effectively.
What happens if you lose your security PIN?
If you lose or misplace your security PIN for one (or all) of the three credit bureaus, you’ll need to contact each one in writing individually.
Along with your request, be sure to send a copy of your proof of identification, such as your driver’s license, birth certificate, or passport. There will likely be a fee assessed for sending you a new PIN. Fees typically range between $5 and $10, depending on your state.
Beyond Credit Freezes: Other Strategies to Prevent Identity Theft
There are three types of identity theft as categorized by the Bureau of Justice:
- Unauthorized use of an existing credit account.
- Unauthorized use of personal information to open a new account.
- Misuse of personal information for fraudulent purposes.
Attempts at any of these actions also constitute fraud.
In addition to implementing a credit freeze, there are a few other proactive ways to prevent identity theft. The first is placing a fraud alert on your credit report.
A fraud alert requires creditors to verify your identity before offering any credit. The company will try to get in touch with you to do this, so make sure your contact information is up-to-date.
You only have to request a fraud alert from one of the major credit reporting agencies, then that agency will notify the other two of your request. Fraud alerts are free for 90 days and can be renewed.
Another option is to sign up for a credit monitoring service, which can track your credit activity, notify you of any changes to your credit score, or potentially both.
The exact services and costs vary depending on the company you select, so do your research before choosing one. To help you out, we’ve created a roundup of the best credit monitoring services for 2024.
Identity theft has unfortunately become a common occurrence in the modern world. As a result, it’s becoming more and more likely that you’ll be affected by this criminal practice at some point in your life.
Protect your finances by taking proactive steps to fight against becoming a victim. While there are many products and services available today, implementing a credit freeze is a simple, low-cost solution to prevent thieves from opening new credit accounts with your personal information.
Frequently Asked Questions
Who can place a credit freeze?
A credit freeze is a protective measure open to everyone, not just victims of identity theft. The FTC states that any individual can freeze their credit report to block unauthorized access.
How long does a credit freeze last?
A credit freeze usually lasts until you temporarily lift it or permanently remove it. In some states, a credit freeze will expire automatically after seven years.
Can I still apply for credit while my credit is frozen?
If you have a credit freeze in place, you won’t be able to apply for credit until you thaw or unfreeze your credit report. Once your report is unfrozen, then you can proceed with applying for a credit card, loan, or in-store financing. You can also replace the freeze when you’re done if you’d like.
Can I place a credit freeze on my child’s credit report?
Yes, if your minor children have credit files, it’s a good idea to freeze them. You’ll need your child’s birth certificate, Social Security card, and proof of your child’s address. You then must contact each of the three major credit bureaus (Equifax, Experian, and TransUnion) and request that a credit freeze be placed on your child’s credit report.