Identity theft is a growing threat affecting millions of Americans each year. According to the Federal Trade Commission, there were over 1.4 million reports of identity fraud in 2021, up dramatically from 2020. With data breaches and hacking steadily on the rise, freezing your credit can be an effective way to protect yourself from fraud.
This comprehensive guide provides everything you need to know about credit freezes. I‘ll cover how they work, the precise freeze process for each bureau, when to lift a freeze, and alternatives like credit locks and fraud alerts. Follow along for expert advice on using credit freezes to defend against identity theft.
What is a credit freeze and how does it work?
A credit freeze, also called a security freeze, seals off access to your credit reports and prevents lenders or creditors from reviewing your files. Freezing your credit blocks identity thieves from opening any new credit cards or loans in your name.
With a freeze in place, criminals can‘t access your credit reports or open fraudulent accounts, even if they have your Social Security number or other personal data. A credit freeze only blocks new account activity and has no impact on your existing credit cards, loans, or credit score.
Step-by-step guide to freezing your credit
Placing a credit freeze is quick, easy, and free for all consumers. Here is a step-by-step guide to freezing your credit correctly with each bureau:
Step 1: Contact each credit bureau separately
You must place a credit freeze with Equifax, Experian, and TransUnion individually. Freezing your credit with only one or two bureaus leaves the other bureau(s) accessible!
Step 2: Request a freeze online
Visit each bureau‘s website below and look for the credit freeze page. Freezes can also be requested by phone or physical mail.
- Equifax – Equifax.com/personal/credit-report-services
- Experian – Experian.com/ncaconline/freeze
- TransUnion – TransUnion.com/credit-freeze
Step 3: Create your online account
You‘ll need to set up a username and password to access your credit freeze going forward. Each bureau will also ask you to create a 4-8 digit PIN to use when lifting your freeze.
Step 4: Enter your personal information
Provide your full legal name, current and previous addresses, Social Security number, and date of birth.
Step 5: Check your email for confirmation
Once submitted, the credit bureau will email confirmation that your freeze is in effect. Expect to receive confirmation within 1 hour for online and phone requests.
Step 6: Freeze your reports with the other bureaus
Repeat steps 2-5 to place freezes with the remaining two credit bureaus. This seals your credit reports at all three major bureaus.
Placing credit freezes is simple and fast when done online. Expect the process to take 10-15 minutes for each bureau. It can also be completed by phone or physical mail if preferred.
When should you freeze your credit?
Freezing your credit is especially useful in these common situations:
- You discover an account opened fraudulently – Freeze your credit immediately if you notice any unauthorized accounts or charges on your existing credit. This prevents further damage.
- You‘re notified of a data breach – Freezing your credit after a breach containing your info, like SSN and birthdate, can prevent criminals from opening new fraudulent accounts.
- You lost your wallet or had information stolen – Identity thieves can use stolen cards, IDs, and documents to commit fraud. A credit freeze adds protection if your physical items are lost or stolen.
- You‘re not using or building credit – Consumers who don‘t plan to take out new loans or credit cards can freeze their credit as a preventative measure against identity theft.
- You share finances with family – Freezing your credit protects against fraudsters abusing authorized user status or joint accounts to open new credit in your name.
- You discover errors on your credit reports – Suspicious activity like unknown cards or loans can indicate identity theft. Freeze your credit until you resolve the issues.
According to a 2022 AARP study, 37% of adults have already placed a credit freeze to protect themselves. Freezing your credit is a powerful tool to reduce potential fraud damages.
When should you lift a credit freeze?
In most cases, you‘ll need to lift your credit freeze before applying for new financing like credit cards, auto loans, or mortgages so lenders can access your credit reports.
Generally, lift the freeze 1-3 business days before submitting a credit application. Here are some examples that will require you to unfreeze:
- Applying for credit cards, personal loans, student loans, or other financing
- Leasing an apartment – landlords often run credit checks on applicants
- Opening new utility accounts that require credit checks
- Applying for a cell phone plan that requires a credit check
You‘ll need to temporarily lift the freeze with each credit bureau the lender will check. After getting approved, you can re-freeze your credit to continue blocking identity thieves.
How to lift a credit freeze
The process for lifting a freeze is the same as placing one. Here are the steps:
- Log in to your account at each bureau‘s website
- Enter your PIN to verify your identity
- Select the option to lift freeze and enter timeframe
- Check emails for lift confirmation
Expect bureaus to lift the freeze within one hour for online and phone requests. You can also re-freeze your credit after the new account is opened.
Credit freeze vs. fraud alert vs. credit lock
Along with credit freezes, consumers have two other options to help detect fraud – fraud alerts and credit locks. Here‘s how they compare:
| Credit Freeze | Fraud Alert | Credit Lock | |
|---|---|---|---|
| Cost | Free | Free | Often have fees |
| Protection | Blocks new accounts | Warns of new accounts | Blocks new accounts |
| Duration | Permanent until lifted | 1 year | Varies, ongoing |
| Impact | None on credit score | None on credit score | None on credit score |
Overall, credit freezes provide the strongest protection against new fraudulent accounts. But layering on fraud alerts provides additional monitoring and warnings if thieves attempt to abuse your identity.
Real-life example of a credit freeze preventing fraud
To understand the value of credit freezes, consider this real-life example of identity theft reported to the Identity Theft Resource Center:
Linda had her purse stolen while on vacation. It contained her driver‘s license, credit cards, and other critical personal information. Upon returning home, she immediately froze her credit with all three bureaus to prevent any potential misuse.
A few weeks later, Linda received an alert that someone attempted to open a fraudulent credit card using her stolen information. Thankfully, due to her credit freeze, the application was automatically denied and Linda avoided major identity theft damages.
This story shows how Linda‘s proactive freeze protected her after she lost personal identifying information. Without the freeze, thieves could have opened cards in her name resulting in financial loss and months repairing her credit.
Is freezing your child‘s credit beneficial?
Freezing your child‘s credit can certainly be beneficial to prevent identity theft. Child identity theft is growing – more than 1 million children were victims of identity theft in 2017 according to Javelin Research.
Thieves target minors because they have clean credit profiles that may go unmonitored for years. Parents freezing their child‘s credit until they start applying for student loans or other credit can prevent accounts being opened fraudulently.
The process for freezing a child‘s credit is the same as adult credit freezes. Parents will need to provide the child‘s personal information including Social Security number. An additional step may involve providing proof of legal guardianship.
Pros and cons of credit freezes
Pros
- Prevent new fraudulent accounts and limits fraud damages
- Completely free – no fees to place, lift, or remove
- Doesn‘t affect your credit score
- Permanent until you unfreeze
- Peace of mind against identity theft
Cons
- Slows approval process for new credit
- Must remember PIN to lift freeze
- Time consuming to manage with 3 bureaus
- Doesn‘t prevent existing account fraud
While not perfect, credit freezes provide vital protection against new account identity theft – one of the most common and damaging forms. Maintaining diligent monitoring of your existing credit is also critical to limit fraud risk.
Are credit freezes foolproof?
It‘s important to understand that while helpful, credit freezes cannot prevent all types of identity theft or fraud. Specifically, freezing your credit does not protect you against:
- Unauthorized charges on your existing credit or debit card accounts. Freezes only prevent new accounts.
- Other types of identity theft like medical or employment fraud. Thieves can still potentially access your healthcare or file fraudulent tax returns.
- Accessing your credit reports. Creditors, insurers, or employers can still perform soft pulls without your consent. Hard inquiries will be blocked when frozen.
- Fraud on inactive accounts – lenders may not check frozen reports when increasing limits or replacing lost cards.
Regularly monitoring your credit reports, accounts, and statements is crucial to detect any suspicious activity and limit losses from identity theft. Think of freezes as one layer of protection to incorporate with other good habits.
Who should consider freezing their credit?
Here are some of the most common groups who can benefit from proactively freezing their credit:
- Data breach victims – Reduce risk if your info was compromised
- Senior citizens – More frequent fraud targets so prevention helps
- Military members – Deployments make you vulnerable to identity theft
- Homeowners – Large asset at risk if personal info is stolen
- Children – Freeze minor‘s credit until they become adults
- Deceased relatives – Prevents thieves from opening fraudulent accounts
Anyone concerned with identity theft or reducing fraud risk can benefit from freezing their credit reports. The minimal time investment is well worth the peace of mind.
Is it difficult to get new credit with a freeze?
The process of lifting a freeze is quick and simple when done online or by phone. Most freezes can be lifted within an hour, compared to 1-3 business days previously. So freezes cause minimal delays compared to the past.
That said, the extra step of lifting the freeze does mean applying for new credit is not quite as seamless as with open credit reports. You‘ll have to plan a few days in advance before submitting applications. Some tips:
- Lift the freeze 1-3 business days before applying for credit
- When loan shopping, lift the freeze after you have compared initial rate quotes
- Temporarily lift for 1-2 weeks when needing multiple credit checks
- Ask lenders which bureau they use and only lift that freeze
With a bit of planning, you can lift credit freezes quickly when needed without too much hassle. The minor delays are well worth the fraud protection.
Answers to commonly asked questions
Freezing your credit reports can be confusing if you‘ve never done it before. Here are answers to some frequently asked questions:
Does freezing my credit hurt my credit score?
No, a credit freeze does not hurt or lower your credit score. Credit bureaus will not show the freeze on your actual credit reports. You can continue using credit cards normally.
Can I still get my free annual credit reports with a freeze?
Yes, you can still access your free annual credit reports from each bureau while your credit is frozen. The freeze only blocks businesses from accessing your reports unless you allow it.
Do I have to freeze my credit with all three bureaus?
Yes, you need to place the freeze with Equifax, Experian, and TransUnion for full protection. Just freezing one or two leaves the other(s) accessible to fraudsters.
Can my spouse freeze my credit for me?
No. To place a credit freeze, you must contact each bureau directly and provide your personal information. The only exceptions are for minors or incapacitated adults requiring guardianship.
If my credit is frozen, will my credit cards still work?
Yes, a credit freeze does not affect any of your current credit cards or loans. You can still make charges and payments normally. It only blocks brand new accounts.
Can a freeze be removed at any time?
Yes, a freeze remains in place permanently until you take action to lift or remove it. You are in complete control and a freeze can be lifted in as little as one hour if needed.
Do credit freezes stop all identity theft?
Unfortunately no, a freeze can‘t prevent all types of identity theft – namely existing account fraud or medical/tax ID theft. Maintaining diligent credit monitoring is still important for full protection.
The bottom line
Freezing your credit can be an extremely effective tool to prevent identity thieves from opening fraudulent new accounts in your name. While not flawless, proactively freezing your credit limits damages and adds vital protection most consumers need in today‘s risky environment. Don‘t wait until it‘s too late!
Combined with diligent credit report monitoring and healthy financial habits, a credit freeze creates a powerful barrier against the most common and damaging types of identity theft. Take action and invest 15 minutes to proactively secure your financial future.
