How to Freeze Your Credit

How to Freeze Your Credit

We used to believe that we could protect our identities from being stolen. We would shred documents that contained our social security numbers and learned to be wary of phone scammers.

But technology has made identity theft easy and out of our control. Large-scale data breaches by hackers put our identities at risk with stolen social security numbers. Criminals can purchase our identities at a low price and then wreak havoc on our financial lives.

Are you worried about identity theft? You should know how to freeze your credit report if needed. We’ll compare and review a credit freeze versus a credit lock and the steps you need to take.

How a Credit Freeze Works

When you freeze your credit report, you give yourself some protection from identity theft. If someone wants to apply for a loan or a credit card using your social security number, the creditor will typically check the credit report before approving the request.

A credit freeze prevents the report from unauthorized access. Without access, the creditor will not be able to see the information needed for approval. Scammers will not be able to open an account using your social security number for any request that requires a credit check.

Credit Freeze or Credit Lock?

A credit lock is a simpler version of a credit freeze. It is easier to “unlock” a credit report than to “unfreeze” it. A credit lock is more of a preventative measure, whereas you can use a credit freeze when you know your information has been compromised.

A credit lock allows lenders to quickly access your credit report when you need it. If you are shopping for a home or car, for example, you can quickly “unlock” your credit report for a lender and then “lock” it again.

However, a credit lock is not a guarantee. Federal law governs a credit freeze and offers legal protections. On a similar note, a credit freeze is free, as required by law, and a credit lock may have a monthly fee from the credit bureaus.

Pros and Cons of a Credit Freeze

A credit freeze has a lot of pros. As mentioned, credit freezes don’t cost anything and don’t impact your credit score. A credit freeze will last forever in most states, so you don’t need to worry about the freeze expiring.

On the other hand, a credit freeze is not 100% effective if a new account does not require a credit check. You’ll also need to do a bit more planning when you want to open an account yourself, such as a new car loan or a new credit card.

A credit freeze gives you peace of mind knowing that accounts cannot be fraudulently opened in your name.

When to Get a Credit Freeze

If your information has been part of a data breach and compromised, the company should notify you. However, there is no federal law covering data breaches, and the notification process varies by state. Many times, companies must maintain and follow their own notification procedures.

Breaches can range from unauthorized access by a third party to a direct hack. Your level of risk will depend on whether or not there was data encryption and the type of information involved.

Sometimes companies will provide you with free credit monitoring as the result of a breach. While you know your money and can spot new accounts, credit monitoring will only go so far. It will give you an alert that there have been changes to your credit report, but it may be too late by that point.

A credit freeze is the only way to prevent access to your credit report. This is your best option for a compromised identity.

How to Freeze Your Credit

Because federal law requires credit freezes to be free, each credit bureau has a process to set this up. The bad news is that you’ll need to contact each credit bureau individually to freeze your credit. However, this is worth the effort to protect your credit.

When creditors pull a credit report to approve a loan or a credit card, they may hit any of the three major credit bureaus: Equifax, Transunion, or Experian. You will not know which credit bureau is used. This is why it is important to initiate a credit freeze at all three bureaus.

You can contact each of the credit bureaus to freeze your credit either by phone or online.

  • 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

For each, you will need to go through a process to verify your identity in order to freeze your credit. Once the bureaus have frozen your credit, it is still a good idea to monitor your credit every six months.

Who Can Access Frozen Credit Reports?

The primary purpose of freezing your credit report is to prevent criminals from opening new accounts. But certain parties can still access your credit report, even with a freeze.

For example, companies that provide you with your credit report or credit monitoring solutions will still need to access your credit report in order to provide you with such services. Any companies that work to investigate or prevent fraud would still have access. 

Any company that already has access to your credit report would continue to have access. This could include any current banks or credit card companies. It could also be companies conducting employment background checks, insurance underwriting, or tenant screening.

Your credit report could be accessed by government agencies, child support agencies, and courts in certain situations. Any collection agencies attempting to collect a debt from you would also have access.

Companies that wish to make pre-approved offers to you would also have access. Pre-approved offers include things like credit-cards or insurance. However, you can opt-out of such offers by visiting https://www.optoutprescreen.com/.

How to Unfreeze Your Credit

You have taken the steps to freeze your credit. Now what? How do you “unfreeze” your credit if you want to take out a new loan or credit card yourself?

Once you’ve made the request to each credit bureau, you’ll be issued a PIN. Keep your PIN in a safe place because you will need it to unfreeze your credit report.

Because unfreezing your credit requires that you contact each credit agency individually and use your PIN, establishing new credit requires a bit more planning. If you know which credit report will be accessed by a creditor, you can contact that credit bureau and make the request to unfreeze.

Once you make the request to unfreeze, the credit bureau must do so. For requests made by phone or online, the freeze must be lifted within an hour. You’ll provide the credit bureau with your PIN set up earlier when you make the request to unfreeze.

You can choose to have the freeze resume after a specific period of time. For example, if you are shopping for a loan, several banks may need access over a few days’ time. You can then have your credit report re-frozen.

How to Freeze Your Child’s Credit

Unfortunately, child identity theft is extremely common. It can go unnoticed for a long time because your child is not regularly accessing their credit report for a loan or credit card. It may not be until you receive bills from collection agencies or a government notice regarding taxes that you realize your child’s identity has been stolen.

The credit bureaus have measures to freeze the credit of a child under the age of 16. However, this will require a few additional steps. You must prove that you have legal standing to freeze the credit of your child.

When you request a freeze for your child, the credit bureau must first create a credit file for your child. You’ll need to provide the same information that you would for an adult credit freeze. Plus, you’ll need to provide the child’s birth certificate and proof that you are the legal guardian.

Once the credit file has been created and you have provided the necessary documentation, the credit bureau will freeze your child’s credit report. The process to unfreeze is the same as it is for an adult; you will need to provide a PIN.

Protect Your Credit

Hopefully, these guides, tips, and contact information help you understand how to freeze your credit. While freezing and unfreezing your credit may seem like a hassle, it is nothing compared to dealing with identity theft.