If you’ve never heard of a credit freeze, or if you don’t know the benefits of credit freeze, then you’re in luck. We’re about to introduce to you possibly one of the most effective protection solutions for identity theft.
It’s mandated by law, it’s offered by all three credit bureaus, and it puts a hard stop to any lender inquiries for your credit report. The credit freeze (also known as a security freeze, credit report freeze, or credit lock down) is often the last resort for identity protection. However, that’s not always the case, as the risks are minimal and the result is keeping you protected from fraud.
What Is A Credit Freeze?
Simply put, a credit freeze is a way for credit holders to control how their credit reports are used by credit bureaus. When you put a freeze on your credit report, you are telling credit bureaus not to give it out to anyone who may ask for it.
This prevents lenders from making inquiries on your credit report. And, as a result, lenders will not be able to issue loans in your name. Credit cards also cannot be opened in your name. (Exception: loans that do not require a credit check. They are usually not substantial and can usually be removed from a credit report through dispute.)
What Are The Benefits Of A Credit Freeze?
- A credit freeze helps prevent a type of identity theft called new account origination identity theft. Many fraudsters will open new loans in someone’s name, run up the balance, and take all the benefits without dealing with any of the consequences. Freezing your credit is an effective way to prevent this, especially if you feel you’re a target.
- It’s very easy, and you can do it online. All three credit bureaus have online forms where you can freeze your own credit. It may take some time to take effect, during which time lenders will still be able to access your credit report.
- You can freeze your spouse’s credit, your child’s credit, or anyone for whom you have power of attorney. Identity theft disproportionately affects the elderly, so if you’re in the care of an elderly person, you can freeze their credit to protect them from fraud.
All in all, these benefits of a credit freeze are substantial and can make a significant difference in protection from common threats.
What Are The Cons Of A Credit Freeze?
- Your credit report can’t be accessed by lenders, making it impossible for you to open loans in your own name. If you want to open new loans, you will have to lift the freeze. This also means other people who may want to see your credit report, such as potential landlords or employers, will not be able to see it either.
- Freezing your credit report costs a small amount of money, usually $10. Not only that, unfreezing your credit report also costs $10. These fees usually get waived for victims of identity theft, though. NOTE: Equifax is currently offering credit freezes for free, as of January 2019.
- A frozen credit report will require a PIN, which isn’t the most secure feature. If you lose the PIN, unfreezing your report will be much more difficult.
Why Would I Need a Credit Freeze?
- …are the victim of identity theft, or you feel you are a target for identity theft,
- …are at risk due to a recent data breach,
- …and/or have zero plans to open new loans, move house, open a new business, or change jobs in the new future (1+ year)…
…then a credit freeze is an excellent option for you, and the benefits of a credit freeze outweigh the cons. Just don’t lose your PIN or forget about the freeze!
I Need a Credit Freeze: How Do I Do It?
Go to these pages:
- Equifax: https://www.equifax.com/personal/credit-report-services/
- Experian: https://www.experian.com/ncaconline/freeze
- TransUnion: https://www.transunion.com/credit-freeze
Follow the steps for each bureau, completing each form. It’s really quite simple.
Your credit will be frozen soon, preventing you or anyone else from taking out loans in your names.
To fully freeze your credit report, you will need to contact all three credit bureaus and have each of them freeze your credit report. This is because all credit bureaus give different credit reports.