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Home » The Credit Freeze: How it Works and Why You May Want One

The Credit Freeze: How it Works and Why You May Want One

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  • 4 min read
What is a Credit Freeze?

In an era dominated by digital transactions and increasing instances of identity theft, protecting your financial well-being has become more critical (and more complicated) than ever. If you are worried about protecting your identity or fear that fraudsters may open new credit accounts that tarnish your credit history, we’re about to introduce you to one of the most effective tools in your arsenal of personal financial security: the credit freeze.

What is a Credit Freeze?

A credit freeze, also known as a security freeze, has nothing to do with putting your credit cards in the freezer. It is a proactive measure that restricts access to your credit report. Essentially, it puts a lock on your credit file and prevents potential creditors from viewing it. This means that even if someone obtains your personal information, they won’t be able to take out loans or open credit cards in your name because most lenders require a credit check before extending credit.

Why Opt for a Credit Freeze?

  • Identity Theft Prevention. A credit freeze acts as a robust deterrent against identity thieves. With a freeze in place, fraudsters can’t open new accounts in your name if a credit check is a required step in the application process.
  • Enhanced Security after a Data Breach. In the event of a data breach where your personal information may have been compromised, a credit freeze adds an extra layer of protection. It serves as a preemptive strike against potential misuse of your data.
  • Impulse Deterrent. A credit freeze will also make it difficult (but not impossible) for you to open new credit accounts. For some, a credit freeze is an effective speedbump that prevents impulsive decisions (like applying for store credit cards whenever prompted).
  • Peace of Mind. Knowing that your credit is securely locked provides peace of mind. You can go about your daily life without constantly worrying about unauthorized accounts tarnishing your credit history.

How to Freeze Your Credit

  1. Contact Credit Bureaus. To freeze your credit, reach out to each of the three major credit bureaus—Equifax, Experian, and TransUnion. You can request a credit freeze online or by phone. When you contact them, you will need to provide the necessary identification and personal information they request.
  2. Secure PINs or Passwords. Upon initiating a credit freeze, you’ll be assigned a personal identification number (PIN) or password. Safeguard this information diligently, as you’ll need it to lift or remove the freeze when necessary.
  3. Monitor Accounts Regularly. A credit freeze is an effective safeguard, but it’s still wise to monitor your existing accounts regularly while the freeze is in place. Regularly review your bank statements, credit card transactions, and credit reports for any suspicious activity and act quickly if you notice anything amiss.
  4. Equifax: 888-298-0045
  5. Experian: 888-397-3742
  6. TransUnion: 888-909-8872

How to Unfreeze Your Credit

If you need to unfreeze your credit, the process is relatively straightforward. Simply contact each credit bureau online or by phone and let them know that you would like to lift the freeze. You can permanently remove the credit freeze or opt for a temporary lift. This is particularly helpful if you need to apply for a specific credit account down the line (such as a new mortgage or credit card). Just let the credit bureaus know that you would like a temporary lift of the freeze for a specific duration or for a particular creditor.

In an age where personal information is increasingly vulnerable to cyber threats, implementing a credit freeze is a proactive step toward fortifying your financial security. It provides a formidable barrier against identity theft and fraudulent financial activities, offering you the peace of mind to navigate the digital landscape confidently. A credit freeze will not change your credit scores, but depending on your habits, your score can change while a freeze is in place. A credit freeze will also not prevent you from using your existing credit accounts or, sadly, from getting a barrage of pre-screened credit card offers in the mail.

If you suspect that there has already been fraudulent activity on your credit report, file a report with the credit bureaus and contact your financial institution, your credit card issuers, and your lenders immediately. It’s also a good idea to report the incident to the Federal Trade Commission (and potentially the police). Once you’ve reported the situation and proven that the activity was unauthorized, your creditors and the credit bureaus should be able to help you erase some (or all) of the damage.

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