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what is a credit freezeIt seems like big corporate data breaches are happening just about every day now. Indeed, the number of data breaches has increased by 157% from 2013 to 2017, according to Experian.

If your Social Security Number gets leaked, fraudsters can easily open new accounts under your identity and rack up huge bills in your name. But there’s one way to stop that from happening before it even starts — by freezing your credit. With a credit freeze in place, potential creditors can’t look at your credit report and, therefore, fraudsters can’t open accounts in your name.

It sounds like a drastic step, but it’s actually not that difficult. Let’s look at what exactly a credit freeze is and how to freeze your credit. That way, you can make sure to take the right steps toward keeping your finances safe and secure.

See Also: Knowing Your Credit Score Will Save You Money And Here’s How

What is a Credit Freeze?

Normally, if you want to take out a loan or open a new credit card, you’ll have to provide the lender with your Social Security Number. That lender then uses your Social Security Number to pull your credit report and make a decision about whether to approve you for credit or not.

If a criminal has your Social Security Number, all they need to do to steal money is to apply for credit in your name.

You can stop that from happening by placing a credit freeze on your report. When a credit freeze is in place, the credit bureaus won’t release your credit report to potential lenders and creditors. This means that they won’t be able to approve the criminal for credit, which then stops the cycle.

Advantages of Freezing Your Credit

The biggest advantage of freezing your credit is that it immediately stops thieves from opening new accounts in your name. Since identity theft can often be difficult to spot, a credit freeze can provide peace of mind.

Freezing your credit is also free. You may have heard previously that it costs a fee to freeze and unfreeze your credit with each credit bureau. This was true in the past. However, with recent legislation changes as of September 21, 2018, it’s now free to freeze and unfreeze your credit with each credit bureau.

Another advantage of freezing your credit is that it’s a one-and-done deal. Placing a credit freeze on your account means it’ll stay there indefinitely. You won’t need to renew it periodically like with some other methods of protecting your credit.

Disadvantages of Freezing Your Credit

Having your credit frozen indefinitely (without you having to renew it periodically) is one perk, but it can also be viewed as a downside in some cases. You might forget that you have a credit freeze in place so that when you really do need to apply for credit, a creditor can’t access your report.

Of course, there are ways to unfreeze your credit, but this roadblock can add a bit of a delay in the credit application process.

Even if you do remember to unfreeze your credit before you apply for a loan or a credit card, it can take a few days to process. You’ll need to remember to unfreeze your credit well in advance of when you actually apply for credit.

Finally, you’ll need to contact each credit bureau individually to freeze and unfreeze your credit. Consequentially, it will take a bit more legwork than with other types of credit security measures.

See Also: 4 Easy Ways to Fix a Low Credit Score That Actually Work

How to Freeze Your Credit
How to freeze credit

You’ll need to contact each of the three credit bureaus directly to freeze or unfreeze your credit.

The easiest way to place a credit freeze is to create an online account with each credit bureau. You can then log into this account to place the credit freeze.

Each credit bureau may provide you with a PIN code when you freeze your credit. Make sure you write this number down and keep it in a safe and secure place. You’ll need to provide this PIN when it’s time to unfreeze your credit report again.

There are options for re-verifying your identity if you happen to lose this PIN. However, it’ll add yet another delay when applying for credit.

Credit Bureau Contact Information to Place Credit Freezes

Here’s how to get in touch with each of the credit bureaus to place a credit freeze:

Equifax

Online:Equifax webpage
Phone:1-800-349-9960
Mail:Equifax Information Services LLC
P.O. Box 105788
Atlanta, GA 30348-5788

Experian

Online:Experian webpage
Phone:1-888-397-3742
Mail:Experian Security Freeze
P.O. Box 9554
Allen, TX 75013

TransUnion

Online:TransUnion webpage
Phone:1-888-909-8872
Mail:TransUnion
P.O. Box 160
Woodlyn, PA 19094

How to Lift a Credit Freeze

When it comes time for you (and not a fraudster) to apply for credit again, you’ll need to unfreeze your credit report. There are a few different ways to do this for each credit bureau.

By Phone or Online

If you placed the credit freeze online, simply log back into your account and unfreeze your credit. Similarly, you can call into each of the three credit bureau’s phone lines and provide your PIN code to unfreeze your report. If you use either of these two methods, the credit freeze should be lifted within one hour.

By Mail

Otherwise, you can also send in your credit freeze release request to each credit bureau by mail. This is the slowest option because it’ll take up to three days for the credit bureau to process your request (not counting transit time for the written request to get to each credit bureau).

Remember to re-freeze your credit again after you’re done applying for credit so that your account is still protected in the future.

See Also: The Ultimate Credit Sesame Review: Is it Safe and Do You Need it?

Credit Freeze FAQs

The truth is that not everybody necessarily needs a credit freeze. If you apply for credit a lot and haven’t had your Social Security Number stolen (at least not that you know of) it can be a bigger hassle than it’s worth. These questions and answers should help you decide if freezing your credit is right for you.

When Should I Freeze My Credit?

If your information has ever been stolen in a data breach or you’ve ever been the victim of identity theft, a credit freeze can be a very good idea. In addition, if you just want some peace of mind and aren’t afraid of the hassle, it might be worth it to you.

How Much Does a Credit Freeze Cost?

Freezing and unfreezing your credit is free. It used to cost money to place and lift credit freezes, but with recent legislation changes, it’s now entirely free.

What are the Alternatives to Freezing Your Credit?

Fraud alerts and credit locking are two alternative options to freezing credit that you may want to consider.

Fraud Alert vs. Credit Freeze

You can place a “fraud alert” on your account at any time. This adds a note onto your credit report requiring creditors to verify your identity first, usually via phone.

If you place a fraud alert with one credit bureau, they’ll notify the other two for you as well. Fraud alerts only last for a year. If you’ve filed a police report for identity theft, your fraud alerts will last for seven years.

Credit Lock vs. Credit Freeze

You can also “lock” your credit with each of the three credit bureaus. This works similarly to a credit freeze in that it prevents creditors from accessing your credit report. However, a credit lock allows you to switch access on and off instantly instead of having to wait for a credit freeze to lift.

Equifax currently offers this feature for free, while TransUnion and Experian require you to sign up for a paid credit monitoring service to get access to this feature.

How Long Does a Credit Freeze Last?

A credit freeze lasts until you lift it, either temporarily or permanently. If you don’t do either of those things, it’ll theoretically last until you die.

Can I Freeze My Child’s Credit?

Identity theft of children is becoming increasingly common and can go undetected for years. If you’re a parent, one way you can protect your child is by placing a freeze on your child’s credit report.

To do this, contact each credit bureau directly and provide proof of identity for both you and your child. You’ll also need to provide documents proving that you are the child’s parent or legal guardian, such as a birth certificate or court order.

Knowing How to Freeze Your Credit Can Protect Your Information

Identity theft can mean untold hours of headaches, hassle, stress, and damage to your finances. Although a credit freeze isn’t hassle-free in itself and can take a little bit of work to set in place, it can be a far safer bet in the long run.

It’s also important to note that you should stay vigilant for identity theft even if you have a credit freeze in place. Remember, it only protects against one type of theft (i.e. from thieves opening new accounts in your name).

But there are many other forms of fraud and identity theft. If criminals get ahold of your current credit card numbers, for example, they can still commit fraud in your name. Thieves can also file fraudulent tax returns in your name, all without accessing your credit report.

It’s better to view a credit freeze as just one tool to keep yourself safe. Nonetheless, it’s an important tool that can still go a long way.

Author

Lindsay is a personal finance expert and writer based in Washington state. After graduating with two degrees in Wildlife Biology and Conservation, Lindsay found herself underemployed and $100,000 in debt. She has since learned how to manage money wisely and uses her experience to help others make smart financial decisions. Today, her work appears on sites like Credit Karma, Magnify Money, Wisebread, Centsai, Discover, and Chime Bank. In her spare time, Lindsay enjoys hiking, reading, homebrewing, travel hacking, and sharing her personal experience on her own blog, GoScienceFinance.com.

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