Freezing Your Credit: The Ultimate Guide

freezing your credit

By Ben Luthi

The amount of money lost due to new-account fraud increased to $3.4 billion in 2018, according to a report by Javelin Strategy & Research. A credit freeze can be an effective way to protect your credit history from this type of fraud.

But if you’re not careful, it can also prove to be an inconvenience. Here’s what you need to know about credit freezes, including how they affect your credit and when it’s worth using one.

What is a credit freeze?

A credit freeze stops anyone, including lenders, from viewing your credit report. So if someone steals your Social Security number and tries to open a credit account in your name, the lender won’t be able to complete the application process, stopping the fraud from happening.

A credit freeze isn’t your only protection against such fraud, however. Depending on the situation, you may want to opt for adding a fraud alert to your credit reports instead.

Credit freeze vs. fraud alert

There are three types of fraud alerts you can add to your credit reports: an initial fraud alert, an extended fraud alert, and an active-duty fraud alert:

  • Initial fraud alert: This alert remains on all three of your credit reports for one year, and is a good choice if you suspect you may be a victim of fraud. You can renew the alert after the year is up.
  • Extended fraud alert: An extended fraud alert remains on your credit reports for seven years, and are designed for people who can prove they’ve been a victim of identity theft or fraud.
  • Active-duty fraud alert: Like the initial fraud alert, this one lasts for one year, and is meant for active-duty military servicemembers.

With each fraud alert type, lenders can still view your credit reports.

“When a lender sees a fraud alert they will not issue new credit until they confirm that you indeed are the person that requested the credit. This means they may take extra steps before they approve any type of credit such as requesting you call in for verification,” says Sa El, co-founder of credit education site Credit Knocks.

Because they still allow lenders to view your credit report, fraud alerts aren’t as strong of a fraud prevention measure as credit freezes. That said, they’re easier to add to your credit reports. Just contact one of the three credit reporting agencies, and they’ll notify the other two for you.

Also, requesting a fraud alert allows you to request a free copy of your credit report from each of the three credit bureaus, and that’s in addition to the free one you already get every 12 months.

If you want to place a fraud alert instead of a credit freeze, you can do so online with one of the three major credit bureaus:

When to consider freezing your credit

Requesting a credit freeze instead of a fraud alert is a good idea if you want to restrict who can view your credit reports. Specifically, here are a few times when it’s worth considering:

  1. You think your information has been included in a data breach
  2. You don’t want pre-screened offers
  3. You’re going overseas for a while
  4. You’ve been robbed

Let’s look a little closer at each...

You think your information has been included in a data breach

In 2018, hackers managed to create 1,244 data breaches and expose more than 446 million records, according to the Identity Theft Resource Center. If your information has been compromised, freezing your credit can be a great way to get ahead of identity thieves and prevent them from using it.

Note that in some cases, you might not find out until months after a data breach whether your information was stolen or not. So keep an eye on the news and consider adding a credit freeze if you or a company you do business with suffers a breach.

You don’t want pre-screened offers

If you’re tired of getting pre-approval offers in the mail from credit card companies and lenders, freezing your credit can stop that from happening. That’s because creditors typically send those mailers after doing a soft inquiry on your credit report.

While that inquiry won’t damage your credit score, you may want to avoid giving creditors that kind of access.

For a longer lasting solution, however, consider opting out for five years or even permanently at OptOutPrescreen.com. The service notifies all three credit bureaus to prevent creditors from running your credit for pre-approval offers.

You’re going overseas for a while

If you’re planning an extended trip abroad, you may not be available to take verification calls from a fraud alert, and you might not have the desire to check your credit report regularly for fraud.

By freezing your credit prior to your trip, you won’t need to worry about checking in every now and then. You can enjoy your trip knowing your credit is safe and secure back home.

You’ve been robbed

If someone has stolen a document that contains your Social Security number, they may have specific intentions to use it for fraudulent purposes. Freezing your credit can stop the thief in their tracks as you take the necessary steps to recover from the theft.

What to consider before requesting a credit freeze

While freezing your credit is a simple way to stop all potential new-account fraud from happening, there are some things to think about before you request one.

It also prevents you from getting credit

A credit freeze doesn’t just keep fraudsters from applying for credit in your name — it also prevents you.

“You have to remove the freeze first,” says El.

You can lift a credit freeze temporarily when you need to submit a credit application. But if you plan on applying for credit more than once over the next year, it may be better to choose a fraud alert, which can be a little more convenient.

One thing to keep in mind is that a credit freeze doesn’t prevent you from building credit with your current accounts.

It won’t stop all fraud

A credit freeze can stop someone from opening a new credit account in your name. But it won’t stop someone from stealing your current credit card and using it to make unauthorized purchases.

As a result, you’ll still need to practice other good habits to prevent identity theft, including:

  • Keep your wallet on you at all times.
  • Use mobile wallets like Apple Pay where possible.
  • Avoid sharing credit card information online when on a public Wi-Fi network.
  • Leave cards you’re not planning to use at home.
  • Use unique passwords instead of the same one for every online account.

It can slow down a job offer

In addition to creditors not being able to see your frozen credit reports, prospective employers won’t be able to either. This means that if you’re applying for a job that requires a credit check, it can delay the interview process.

The same can happen if you’re applying for a bank account that requires a hard credit check — these aren’t common — or a utility account.

To avoid unnecessary delays, check with an employer at the beginning of the interview process to see if they plan to run a credit check. If so, request to have your credit freeze removed or lifted temporarily.

You’ll need to contact each credit bureau

Unlike fraud alerts, which only require you to contact one of the three credit reporting agencies, you have to request a credit freeze with each one individually. You can do so with each bureau here:

To complete your request, you’ll typically need to provide some basic personal information, including your name, date of birth, Social Security number and address.

While the credit bureaus used to charge some people to place a credit freeze this way, the service is now free.

If you have a paid credit monitoring service through Equifax or TransUnion, you can freeze your credit with both reports at the same time. However, these services can get costly if you’re not careful.

How to thaw your credit

If you’ve placed a credit freeze on one or more credit reports and want to lift the freeze, either temporarily or permanently, contact the credit bureau directly to start the process.

Depending on how you submit your request, the thawing process can take anywhere between a few minutes and a few days. Note, however, that the longer wait time applies to requests made via snail mail. If you call or submit your request online, the process goes much more quickly.

To avoid unnecessary work, you may consider asking the creditor before you apply if they’d be willing to share which credit reports they check during the application process. If it’s just one or two bureaus, for instance, you only need to thaw your credit with one or two bureaus, instead of all three.

The bottom line

Freezing your credit can be a great way to stop new-account fraud from happening. But it’s not the only way to protect yourself from becoming a victim of identity theft. A fraud alert can also help you by letting potential creditors know that your information might have been compromised.

Also, good old-fashioned credit monitoring can help you spot fraud when it happens and address it before it gets out of hand. You can do this yourself with a free credit monitoring service like Credit Karma or Credit Sesame.

If you’d rather someone else do the work, however, each of the three credit bureaus offers various levels of credit monitoring at different price points. El recommends this option especially if you don’t have any systems in place to manage your credit yourself.

Compare the features of each paid credit monitoring service against their prices to determine which one is right for you.

About the author

Ben Luthi is a personal finance writer who has a degree in finance and was previously a staff writer for NerdWallet and Student Loan Hero.

Written on April 23, 2019

Self Lender is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@selflender.com.

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