Credit Freeze: How and When to do It

Point of Interest: Freezing Credit

A credit freeze can be a great idea if you suspect fraudulent activity is occurring in your name. If you have been a part of a data breach, had your identity stolen or want peace of mind, a credit freeze is a low-risk and completely free way of protecting yourself.

What is a credit freeze?

A credit freeze is a way of blocking external parties from taking out credit in your name without your knowledge. Unlike a credit lock, which is similar but a bit more flexible in releasing the lock, it doesn’t cost anything. Since late 2018, freezing your credit with Experian, Equifax and TransUnion is free for everyone.

To initiate a credit freeze, you have to contact each of the three major credit bureaus directly to put a freeze on your credit, then you will be given a PIN or a password that you can use to unfreeze it in the future easily. Since a credit freeze blocks creditors from accessing your credit report, anyone trying to open a fraudulent account in your name will have a much more difficult time with it.

Why someone would want to do a credit freeze?

You might be wondering why a person would need to freeze their credit. A freeze on your credit is a good idea if you have experienced any of the following:

  • Your information was included in a data breach.
  • You had your identity stolen.
  • You are concerned that an outside party might try to gain access to your credit report.
  • You received notice that your information may have been accessed by an outside party.
  • You don’t plan to apply for new credit in the next month or so.

Your private information includes your Social Security number, address, phone number, credit card numbers, or account numbers. A credit freeze can stop outside parties and identity thieves from using your information without your knowledge to open an account in your name.

What you need to know before freezing your credit

If you are considering initiating a credit freeze, you’ll want to answer several questions before you decide. 

1. Do you plan to apply for a new line of credit in the next month or less?

If you are on the verge of getting a new car loan or a home mortgage, it might not be the best time to freeze your credit. Although it is easy enough to unfreeze your credit, that will create an extra step during the application process that you might want to avoid. You can always freeze your credit after you receive the new line of credit. However, if you think someone is actively trying to use your credit falsely, then it might be a good idea to go ahead and freeze it.

2. Do you suspect that your information has fallen into the wrong hands?

If you received notice in the mail or via email that your information may have been part of a data breach, an outside party might be able to use your private details to open a fraudulent account. Also, if you see suspicious activity on your credit report or in any of your accounts, someone may have stolen your identity. A credit freeze could be the right choice in these situations.

3. Do you want extra security?

Maybe you haven’t heard that someone took your personal information or noticed any abnormal account activity, but you want to avoid problems in the future. If you’d like to freeze your credit as a precaution, just remember to unfreeze it any time you have to apply for credit in the future. If that’s not a big deal for you, you might consider freezing it for safety’s sake.

4. Are you still willing to be vigilant with your current accounts?

A credit freeze can’t stop people from using your current account information fraudulently. It only prevents individuals from opening new accounts. Therefore, you need to continue to watch your current accounts closely to make sure there hasn’t been any sketchy activity. Also, specific entities can still see your credit reports, like an existing debt collector or a government agency with the proper permission from the courts to view your report.

How to put a freeze on your credit

To initiate a freeze on your credit, you’ll need to contact the three major credit bureaus directly. They don’t work together, so you have to reach out to them individually. The three major bureaus are Equifax, Experian and TransUnion. Typically, you can freeze your credit either online or over the phone with each of them.

You’ll need to give each of the bureaus your personal information to verify your identity, like your name, address, date of birth and Social Security number. Then they will initiate either a temporary or a permanent freeze, and give you a PIN or a password that you need to keep so you can unfreeze your credit later.

The final word

Whether you are freezing your credit out of necessity or to be safe, there are several things you need to continue to do even after your credit is frozen. First, continue to check your monthly statements. If someone already had access to your Social Security number, they may still be using it for fraudulent activity. 

Be sure to hold onto any PINs or passwords. You’ll need to keep these in a safe place to use when you want to unfreeze your credit in the future. Finally, you’ll need to remember to unfreeze your credit if you’re applying for a loan or a new credit card. You don’t want a potential good creditor to be blocked during the process of trying to view your credit report.

Tiffany Verbeck

Personal Finance Contributor

Tiffany Verbeck is a personal finance expert. She uses her storytelling skills gained from a master’s degree in writing to run a freelancing business focused on helping people make and manage their money.