Everything you need to know about freezing your credit

These days it seems like every time you read the news there has been another data breach. Listing all recent violations would take way too long, but rest assured that if you use the credit, shop on popular stores, or have used a carpooling service or one fitness app, there is a good chance that your information is in the database of at least one company that has been breached.

If you assume that at least some of your information has fallen into the wrong hands, the question is, what should you do about it? Regularly checking your credit is an option, but it will only alert you to a problem once it occurs. The good news is that there is one proactive step you can take to protect your information from misuse: You can freeze your credit. The bad news is, it’s not a hassle-free process.

To learn more about how freezing your credit works and why you might want to do it, read on.

Image source: Getty Images.

What does freezing your credit mean?

Freezing your credit involves contacting the credit bureaus – Equifax, Experian, and TransUnion – and locking your credit report.

When you put a security freeze on your credit, you are telling the credit bureaus not to give your information to anyone. This includes credit card companies, banks, and even utility companies. In the majority of states, this freeze remains in effect indefinitely, although in some states it expires – usually after about seven years.

Freezing your credit report is one of the most effective ways to prevent personal information from being misused because of the way we apply for credit in the United States. When you apply for credit, the potential lender checks your credit report for your borrowing history. and credit rating. If you’ve frozen your credit, lenders won’t have access to the information they need to decide whether or not to grant a loan, so they won’t approve any new credit on your behalf.

A security freeze will not affect existing credit accounts. If someone gets your credit card number and charges a fortune, the credit freeze won’t stop them. Your credit information will also remain available to existing lenders, including for use in debt collection.

But, if thieves try to use your Social Security number to get a new credit card or take out a loan, they’ll be thwarted if the person they’re trying to borrow can’t access your credit report.

What are the pros and cons of freezing your credit?

The biggest advantage of freezing your credit is that it offers very strong protection against the misuse of information. Thieves simply cannot acquire credit on your behalf because lenders cannot access credit information.

A freeze offers stronger protection than a fraud alert. When you place a fraud alert on your report, your information is made available to lenders after the credit bureau takes steps to verify your identity. And, while your credit monitoring is responsive – you discover issues when something is posted on your report – a freeze prevents unauthorized accounts from being opened in the first place.

There are, however, a few big drawbacks.

First, there is often a cost associated with freezing your credit, although fees aren’t charged everywhere. According to Value penguin, no fees are charged for credit freezes in seven states. In other states, the fees range from $ 9 to $ 31.15. However, if you have proof that you have been a victim of identity theft, you can usually get a fee waiver.

The other problem is that when your credit is frozen, your report won’t be accessible if you need someone to view it. If you’re trying to rent an apartment, get a new credit card or loan, set up utilities, or do anything else that requires a credit check, you’ll be thwarted until you unfreeze your credit. And, to thaw it temporarily, there is an additional fee to pay in all but eight states.

When you pay to lift the freeze, the credit bureaus have three business days to act, so there may be a delay before the information becomes available. If you need to check your credit for a job opportunity or to turn on your electricity when you move out, that could be a problem – but you can overcome it by anticipating that your credit will be checked and triggering a temporary release from the freeze several times. days in advance.

How to freeze your credit?

To freeze your credit, you will need to contact each of the major credit reporting bureaus. You can do this by using the following links or phone numbers for each of the three major credit bureaus:

You will need to provide your personal identifying information, including your social security number. After you submit your application and pay the fee, the credit bureau will send you a confirmation letter in the mail. This letter will contain a PIN code which you will need to unblock your credit later, so don’t lose it.

Should you freeze your credit?

Freezing your credit makes sense if you know you’ve been vulnerable to a data breach, won’t be applying for new credit anytime soon, and want the ultimate in identity theft protection. If you don’t feel like being vigilant about monitoring your credit reports, freezing your credit is a simple, one-time fix.

Just be aware of the cost – and the fact that you’ll need the time and perhaps the money to temporarily lift the freeze if you ever need a credit check. But it can be a small price to pay for the peace of mind of knowing your credit report is on the safe side.

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