What it Means to Freeze Your Credit

Data breaches and identity theft have been on the rise with the increase in digital convenience and many people are looking for ways to protect their financial information. A credit freeze is one of the most effective tools available in situations of fraud or compromised data breaches.

So, what is a credit freeze, how does it work, why you might consider it, and what should you keep in mind before making the decision to freeze your credit? Let’s take a deeper dive.

What is a Credit Freeze?

A credit freeze (also known as a security freeze) is a free service offered by the three major credit bureaus – Equifax, Experian, and TransUnion.  When you freeze your credit, the bureaus will block access to your credit report.

This means lenders cannot pull your credit report unless you temporarily “thaw” the freeze. Since most companies won’t approve a new loan, credit card, or line of credit without checking your credit report, a freeze essentially stops new accounts from being opened in your name – protecting your finances from the detrimental impacts of having your information compromised or being a victim of fraud.

What a Credit Freeze Does

A credit freeze is one of the most valuable tools to protect your identity and finances if your sensitive information has been compromised. Sensitive information can be anything from your Social Security Number to account numbers. When cyber criminals have that information, they can do serious damage to your financial well-being long after your information was stolen. Freezing your credit does the following:

• Prevents unauthorized individuals from opening new credit accounts using your information.
• Adds an extra layer of protection if your Social Security number or personal data has been exposed.
• Helps reduce the risk of identity theft or financial fraud.

Why Would You Freeze Your Credit?

There are many reasons for wanting to freeze credit, but most of the time, it usually has something to do with fraud.

1. Your Information Was Exposed in a Data Breach.

Unfortunately, data breaches are common. If a company you’ve dealt with announces that your information – especially your social security number – may have been exposed, freezing your credit is one of the most proactive steps you can take.

2. You’ve Been a Victim of Identity Theft

If someone has already used your information to apply for credit, a freeze can stop additional fraud while things are worked out.

3. You’ve Noticed Unauthorized Activity on Your Account

If you see there are charges on your account that you are unaware of, you could be a victim of a data breach or identity theft without knowing. Freezing your credit is a way to add an additional layer of protection while you verify the extent of the issue.

4. You Want Peace of Mind

Even if you haven’t experienced fraud, freezing your credit simply reduces your risk. Many people choose to freeze their credit and “thaw” it only when applying for a mortgage, credit card, or auto loan.

5. You Don’t Plan on Opening New Credit Anytime Soon

If your borrowing needs are minimal or infrequent, freezing your credit can be a set-it-and-forget-it way to safeguard your financial identity.

10 CYBER SECURITY MISTAKES ALMOST EVERYONE MAKES

Is Freezing Your Credit Hard to Do?

Not at all. You can freeze or unfreeze your credit online, by phone, or by mail directly through each bureau. You’ll create or use a PIN or password to manage a freeze, and you can lift it temporarily whenever you need to apply for credit.

Most freezes or thaws take effect immediately.

Should you Freeze Your Credit?

• Have you recently been notified of a data breach where your information was compromised?
• Is there suspicious or unauthorized activity on my accounts?
• Has there been a sudden and unprecedented sudden drop in your credit score?
• Do I plan to apply for new credit soon (mortgage, car loan, home equity loan, etc.)?
• Do I want the strongest protection against unauthorized credit accounts?

WHAT SHOULD I DO IF THERE’S UNAUTHORIZED ACTIVITY ON MY ACCOUNT?

Cons to Freezing Your Credit:

Inconvenience when applying for new credit: You’ll need to temporarily lift the freeze with each credit bureau before applying for loans, credit cards, or even some utilities and rental agreements.

Time and effort to manage: While it’s free, you must contact all three major credit bureaus (Experian, Equifax, TransUnion) to freeze and unfreeze your credit.

Doesn’t stop all fraud: A freeze prevents new credit accounts from being opened, but it doesn’t protect existing accounts from unauthorized charges or other types of identity theft.

HOW FRAUDSTERS ARE USING CURRENT EVENTS TO CARRY OUT SCAMS

While you should always be monitoring your bank accounts, using strong passwords, and reviewing your credit report regularly, a freeze adds an important layer of defense that can help you keep your identity – and your finances – safe.

Trying to stay ahead of today’s scams? Learn more about how fraudsters are trying to gain access to your sensitive information:

RECENT FRAUD TACTICS