What’s a Credit Freeze and Why Would You Need One?
In times of high data security risk – think identity theft or financial fraud – financial consumers have an intriguing option to protect their sensitive personal data.
It’s called a credit freeze, and just like a traditional insurance policy, a credit freeze just might be a necessity someday, when you need it most.
“A credit freeze is the single best thing you can do to help protect yourself from identity theft,” said Steven Weisman, a college professor who teaches white collar crime at Bentley University and the author of the book “Identity Fraud Alert.” “With a credit freeze, even if someone has your personal information such as your Social Security number, they will not be able to get access to your credit reports.”
“Lenders and others granting credit need to review your credit report before granting credit therefore if your credit reports are frozen, it helps prevent someone who has your personal information from leveraging that information for personal gain through identity theft,” Weisman noted.
That extra layer of protection can be highly beneficial to financial consumers.
“When an identity thief can access your identification, such as a Social Security number, they can also create credit in your name,” said Robert Siciliano, cyber protection instructor at IDTheftSecurity.com. “However, if your credit file is frozen, the bad guys can’t access it any longer. With a credit freeze, your credit file is inaccessible.”
Having your credit report “frozen” doesn’t mean you can’t open it up it when needed.
“To get access to your frozen credit, when you need to new line of credit, you have to use a credit bureau issued PIN to unfreeze it,” Siciliano added. “It’s easy. Freezing a credit report doesn’t affect any existing lines of credit, and the process is free for everyone – including kids.”
How to Freeze Your Credit
Requesting a credit freeze is simple.
“Just contact each of the three major credit bureaus – Experian, Equifax, and TransUnion – either online, by phone, or by mail,” said John Davis, founder of ScoreSense, a Dallas, Tx.-based credit score services company.
“They will ask you to confirm your identity, including your Social Security number, date of birth, and address. Each credit bureau will provide you with a password or personal ID number to be used when you want the freeze removed.
Here’s a quick way to freeze credit quickly and easily.
To freeze your credit with Equifax, click here.
To freeze your credit with Experian, click here.
To freeze your credit with Trans Union, click here.
You can freeze your credit indefinitely or for a specific time period. “It doesn’t hurt your credit core to leave it in place indefinitely and have that extra layer of security,” Davis said. “That said, if you are applying for a new job or moving then you’d need to remove the freeze with all three credit bureaus.”
As a credit freeze is free to consumers, you can keep it in place permanently or remove the freeze temporarily as is needed. “You can also thaw your freeze for a specific creditor for a period of time which is a safe option,” Davis said.
Davis also points out that that only reputable lenders or creditors will always check your credit report. “But if you do feel your identity has been compromised then it may be worthwhile putting credit monitoring in place alongside the credit freeze,” Davis said. “By monitoring your credit you will have an early warning if credit is taken fraudulently.”
In fact, there really is no reason to terminate a credit freeze.
“If you need to temporarily lift the credit freeze such as when you are going to apply for a mortgage, you can merely temporarily unfreeze your credit report for a sufficient time for the bank to review your credit report and then immediately thereafter refreeze it,” said Weisman.
Weisman recently leased an automobile and he unfroze his credit reports for 48 hours to give the lender time enough to review the applicable credit reports. “After the 48 hours my credit reports were automatically frozen again. As a result of the massive Equifax data breach of 2017, Congress passed legislation that eliminated all charges to freeze and unfreeze credit reports, so there was no cost to me.”
Consequently, if you find yourself in data security risk, freeze your credit as soon as possible for you and for everyone in your family.
“There are no drawbacks and tremendous benefits,” Weisman said.
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Brian O'Connell has been a finance writer at TheStreet, TheBalance, LendingTree, CBS, CNBC, WSJ, US News and others, where he shares his expertise in personal finance, credit and debt. A published author and former trader, his byline has appeared in dozens of top-tier national publications.