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A credit freeze is one of the most important steps you can take to protect yourself from having identity thieves open credit accounts in your name. Freezes prohibit consumer credit reporting agencies from disclosing the contents of a credit report to any person requesting the data. Without that credit file, lenders generally will not extend credit to you – or anyone claiming to be you.
In other words, a credit freeze helps to prevent new credit accounts from being established in your name.
Freezing your credit (also known as placing a security freeze) is becoming increasingly important. With nearly all of our financial and personal information living in the cloud, we are increasingly vulnerable to fraud and identity theft. In fact, identity theft accounted for $16.8 billion in losses spread across 16.7 million victims in 2017.
The fact that Equifax, one of the major credit reporting agencies, suffered a security breach serves as a warning. The theft of social security numbers and other personal details means that someone out there might have all of the information they need to steal your identity. To be clear, a credit freeze won’t protect you from someone stealing your identity, but it will make it more difficult for them to use your stolen identity to open fraudulent credit accounts in your name.
With identity fraud victims reaching an all-time high, it’s smart to take the steps to protect your financial assets. But is freezing your credit worth it?
It used to cost money to freeze your credit, but it’s now required by law that credit reporting agencies offer credit freezes for free. While it seems like a no-brainer to freeze your credit, let’s explore the pros and cons so that you can make the best decision possible.
The Pros Of Freezing Your Credit
- Freezing your credit reduces the ability for someone to create a fraudulent credit account in your name
- A credit freeze gives you peace of mind knowing that your credit report is secure
- A freeze won’t impact your credit score or affect your ability to use your existing credit accounts
- Credit freezes are now free and won’t cost you a penny
- Freezing your credit will prevent you from impulsively applying for a new credit card at a store since lifting a freeze will take roughly 20 minutes
- In most states, credit freezes last indefinitely, so you don’t have to worry about them expiring until you lift them
The Cons Of Freezing Your Credit
- A credit freeze isn’t guaranteed to be 100% effective
- You need to contact each credit reporting agency individually to issue a credit freeze and then subsequently to lift the freeze
- You’ll need to plan ahead when opening a new credit account (mortgage, credit card, auto loan, etc.) since you’ll need to request a temporary lift of the credit freeze
As you can see from the list of pros and cons, there are tremendous benefits to freezing your credit, while the downside mostly deals with convenience. I think it’s a small price to pay for the security that it offers.
If you’ve ever had to dispute anything on your credit report or deal with a fraudulent account, then you’ll know that the amount of time it takes to instate a credit freeze is time well spent. The time involved in getting a credit freeze from the major credit bureaus pales in comparison to the hassle of disputing an error on your credit report.
If you are ready to freeze your credit, here’s what you need to know.
How To Freeze Your Credit
When you are ready to freeze your credit report, you can contact the credit bureaus to establish a credit freeze by phone or online at the sites and numbers below. I have found that completing the process online is more convenient.
Equifax: Online or by phone at 1-800-685-1111
Experian: Online or by phone at 1-888-397-3742
TransUnion: Online or by phone at 1-888-909-8872
Once you verify your identity and make the request, you’ll receive a PIN. Store the PIN in a safe place. You’ll need this PIN to unfreeze, or thaw, your credit report before you establish new credit accounts. Remember that you need to contact the major credit bureaus individually to freeze and unfreeze your file.
Once your credit is frozen, it’s still smart to request a free credit report at least every 6 months at www.annualcreditreport.com to make sure that everything in your credit file is accurate. Remember that it’s possible for companies to misreport an on-time payment as being late. A credit freeze isn’t a substitute for monitoring your own credit report from time to time.
While the process of freezing your credit is time consuming, take comfort in the fact that you’ll be protecting yourself and your loved ones if you decide to get a credit freeze.
Other Ways To Protect Yourself
In addition to a credit freeze, it’s smart to use secure passwords on all of your banking, email, and social media accounts. Making it harder to be hacked will make you a less attractive target for identity theft and credit fraud.
I personally use and recommend a password manager to store and create secure passwords for all of my accounts. It’s impossible to completely eliminate the threat of identity theft, but it’s smart to reduce it as much as possible.
Another way to protect yourself is to limit the amount of personal information you share online. For example, if your security question for many sites is: “What is the name of your dog?”, then don’t post your dog’s name on social media on a daily basis.
Bottom Line
Freezing your credit isn’t a perfect solution to protecting yourself from identity theft and credit fraud. It is, however, effective at preventing criminals from opening credit accounts in your name. Now that credit freezes are free, there is little reason not to do it.
The process of establishing and lifting a credit freeze can be inconvenient. But it’s nothing compared to the headache of dealing with someone opening accounts in your name (do you really have the time to file a police report?).
So protect yourself and your loved ones by both freezing and monitoring your credit reports.
