Everything You Need to Know About Freezing Your Credit

Dec 19, 2018

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Are you worried that cybercriminals will steal your identity to open a credit card account in your name? Or maybe you fear that a hacker will use your information to take out a payday loan in your name.

Your fears aren’t unfounded. According to the 2018 Identity Fraud Report from Javelin Strategy & Research, 16.7 million people fell victim to identity theft last year. That’s an all-time high, and proof that this type of crime is far from rare.

There are ways to protect yourself from identity theft, though. One way? You can freeze your credit.

When you freeze your credit, you prevent lenders and creditors from accessing your credit reports. If a hacker steals your Social Security number or other personal information and tries to open a new credit card account in your name, the company behind that card won’t be able to access your three credit reports, one each maintained by the national credit bureaus of Experian, Equifax and TransUnion. This means that they won’t be able to open a new account in your name.

This, then, will stop thieves from opening up new accounts under false identities.

The good news? Freezing your credit is now free. The bad news? Credit freezes can only stop a relatively rare form of identity theft.

What a Credit Freeze Can Do

Justin Lavelle, chief communications officer with New York City-based BeenVerified.com, an online provider of background checks, said that freezes are effective ways to prevent thieves from opening a new account in your name. Lavelle said that this, though, is the rarest type of fraud, and will still leave you open to other forms of identity theft.

“A credit freeze will not prevent a thief or hacker from using your current accounts,” Lavelle said.

And that is a far more common form of identity theft. A hacker can cause plenty of damage by using your personal information to access your favorite rewards card account or your checking account, and a credit freeze won’t stop this.

This doesn’t mean that you shouldn’t freeze your credit. After all, a freeze is free, simple to request, has no impact on your credit score and will protect you from one type of identity theft.

The downside? If you do want to apply for a new credit card or loan, you can’t do it if your freeze is in place. You’ll have to remove your freeze first. Fortunately, that’s free, too. A federal law that went into effect Sept. 21 requires the credit bureaus to allow free credit freezes. In the past, TransUnion, Equifax and Experian charged for these freezes.

Initiating a credit freeze will help you avoid fraud and credit theft, but has it
Initiating a credit freeze will help you avoid fraud and credit theft, but you’ll have to unfreeze your credit when applying for a new card or a loan. (Photo via Shutterstock)

Initiating a Credit Freeze

You still must request freezes at all three credit bureaus. You can start the process online by contacting Equifax, Experian and TransUnion. You can also contact them by phone at the following numbers:

  • Equifax (800-349-9960)
  • Experian (888-397-3742)
  • TransUnion (888-909-8872).

The bureaus are required to freeze your credit reports within one business day. Once you’ve requested a freeze, each agency will send you a confirmation letter with a unique PIN or password. It’s vital that you keep the PIN or password in a safe space, as it’ll be needed when you want to unfreeze your report.

If you want to unfreeze your reports — say you want to apply for a mortgage loan or new credit card — you’ll again have to contact the each of the three agencies individually. Once you request this, the bureaus must lift your freeze within one hour.

When you call in to unfreeze your report for a temporary period, be sure to give them a specific time period or lift it to a specific party. Say, for example, you want to open a new credit card. If possible, contact the issuer to ask which agency (or agencies) it pulls your credit information from. Then, ideally, you’ll be able to call that credit agency (or agencies) and unfreeze your report for either a period of time or for the issuer that will be inquiring about your credit file.

Some other helpful information about credit freezes includes the fact that you won’t stop receiving prescreened credit card offers, unless you opt out by calling 888-567-8688. In addition, while your report is frozen, your credit will continue to be available to some entities. For example, your report can be released to your existing creditors or to debt collectors acting on their behalf. In addition, government agencies may have access in response to a court or administrative order, a subpoena or a search warrant.

Thinking in the long term, when does your credit freeze end? In a few states, your credit freeze will automatically expire after seven years. In most cases, however, your freeze will remain in place until you ask the credit reporting agency for it to be removed.

Not a Cure-All, But a Useful Tool

Dave Sullivan, vice president of marketing with People Driven Credit Union in Lansing, Michigan, said that while a credit freeze doesn’t prevent all forms of identity theft, it is still a useful tool for consumers looking for protection.

“A credit freeze is the only way to completely lock your credit file from criminals,” Sullivan said. “A credit freeze blocks all new inquiries for debt. The creditor gets no information back at all.”

Patti Black, a certified financial planner with Birmingham, Alabama-based Bridgeworth Financial, said that the 2017 Equifax data breach provided yet more evidence of how important it is for consumers to protect their personal information.

Black said that she has placed freezes on her own credit reports. The process was painless and quick. Black said it took about 30 minutes total for her to order freezes at all three bureaus.

“I strongly recommend that my clients freeze their credit reports,” she said. “A credit freeze is effective protection against identity theft.”

Not the Same as a Fraud Alert

Robert Siciliano, security analyst with Redwood City, California-based Hotspot Shield, a provider of virtual private networks, said that it’s important to understand that a credit freeze is different from a fraud alert, something that often confuses consumers.

A fraud alert, which is also free, puts a notice on your credit report telling credit card companies and lenders that you might have been a victim of identity theft. You only have to notify one of the bureaus to request a fraud alert. Once you do, that bureau will contact the other two and they, too, will place fraud alerts on your credit reports.

Once you have fraud alerts in place, businesses must verify your identity before they issue credit. Lenders and credit card companies, then, might contact you before approving any requests for credit in your name.

Fraud alerts do provide some form of protection. But Siciliano says that placing a fraud alert is not a substitute for a credit freeze.

“A fraud alert only lasts for one year, and the bad guys can still access your credit file and apply for new credit,” Siciliano said. “This informs a creditor that you might have had your ID stolen, but they can still, and do, issue credit. It’s really just a false sense of security.”

Additional reporting by Emily McNutt.

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