What Is a Credit Freeze?
When your personal information is compromised, you’re at risk of having your identity stolen, which can lead to surprising tax bills, denial of credit, and even arrest. Considering the increased frequency and severity of data breaches in recent history, many Americans have had some personal information stolen, including passport numbers and Social Security numbers. If you’re concerned that your identity may be at risk, a credit freeze may help protect you from identity theft.
What Is a Credit Freeze?
A credit freeze, also called a security freeze, blocks companies from making new inquiries for your consumer credit report. Since creditors can’t check your credit report to determine your creditworthiness, potential thieves would have a much harder time opening fraudulent accounts.
You can still check your own credit report and score when you have a credit freeze in place.
It’s free to freeze and unfreeze your credit reports with the three major credit bureaus: Equifax, Experian, and TransUnion. Once you make an online or phone request to freeze your credit report, the change will take effect in one business day. A freeze request made by mail will be effective within three business days.
You have the flexibility to lift the freeze when you’re ready to apply for credit, using a PIN either you or each bureau provides (it depends on the bureau). You can temporarily lift the freeze, specifying how long the lift should be in effect. Requesting a temporary lift online or over the phone gives you faster results—the bureaus must lift the freeze within one hour. Otherwise, if you make the request by mail, the bureau must lift the freeze in three business days.
Companies can still pull your credit report to screen you for credit card offers even with a credit freeze in place. You may still get pre-approved credit offers after freezing your credit report.
You can freeze your credit reports with smaller credit bureaus too. However, these agencies may still charge a fee to freeze and unfreeze your credit report depending on your state’s laws.
Credit Freeze Alternatives
A fraud alert is another security measure that can help you prevent identity theft, but it’s not as strong as a credit freeze. With a fraud alert, companies must take additional steps to verify your identity before accessing your credit report. A credit freeze only allows a company to check your credit if you lift the freeze first.
All major credit bureaus offer a subscription-based lock service that operates similarly to a credit freeze, but allows you to lock and unlock your credit report online or via mobile app. A credit report lock requires you to pay a monthly fee to use the service, and fees vary by credit bureau.
As an optional, paid service offered by credit bureaus, a credit lock is not governed by federal law. At any time, credit bureaus can change the terms, require you to opt-in to marketing emails, or add an arbitration clause.
Is a Credit Freeze Right for You?
A credit freeze doesn’t offer 100% protection from identity theft. For example, freezing your credit report won’t protect you if a company is willing to grant credit without accessing your credit information. Thieves can also use your personal information to commit other types of fraud, like tax fraud.
Freezing your credit report prevents thieves from opening new accounts and using your personal information, but it doesn’t stop credit card fraud altogether. A credit freeze also won’t prevent account takeover fraud, which happens when someone hacks into one of your existing accounts and makes themselves a primary or authorized user on the account. A thief may change the password and email address on the account, making it difficult for you to take possession of the account again.
While freezing your credit does offer some protection against identity theft, it can be inconvenient. Each time you need to make a credit-based application—such as applying for a loan or getting a background check for a job—you’ll have to contact each bureau to lift the freeze then wait for your credit report to unfreeze.
A few companies and entities can still check your credit report when you have a credit freeze in place. Companies that you already have a relationship with, certain government agencies, and credit monitoring services you’ve subscribed to will still be able to check your credit report despite your credit freeze. Debt collectors who are working on behalf of a previous creditor can also check your frozen credit report.
If you suspect your personal information has been compromised—perhaps because you’ve received a data breach notification—freezing your credit can protect you against potential identity theft. A credit freeze can also protect you from further damage if you’ve already been an identity theft victim.