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Security Freeze

Are There Any Downsides to Freezing Your Credit?

Through April 20, 2021, Experian, TransUnion and Equifax will offer all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help you protect your financial health during the sudden and unprecedented hardship caused by COVID-19.

Dear Experian,

Are there any downsides to freezing your credit?

- DTB

Dear DTB,

A credit freeze is a free tool available to help victims of identity theft protect themselves and their credit. But it is an extreme step, and there are some drawbacks. If you have a freeze on your credit report, you will need to remember to lift, or "thaw," the freeze prior to applying for credit. You'll also need to place and remove freezes separately at each of the three national credit reporting companies (Experian, TransUnion and Equifax).

If you have had your personal information compromised and are worried about credit fraud, a credit freeze is not the only tool available to you.

Instead of a credit freeze, you might consider adding a fraud alert, also called a security alert, to your credit reports. When you request an initial fraud alert, Experian will automatically share your request with the other two major consumer credit reporting agencies.

To determine which fraud prevention tool may be right for you, here's how the different options work:

  • Temporary fraud alert: A temporary, or initial, fraud alert notifies potential lenders accessing your report that someone may be trying to apply for credit fraudulently. It asks the lender to take extra steps to verify your identity. If you are worried that your personal information may have been compromised, an initial alert is a good first step to protecting yourself. It lasts for 12 months.
  • Extended fraud victim alert or victim statement: If you've been a victim of credit fraud, it's best to file a police report or identity theft report with law enforcement. Once you submit a copy of that report to Experian, we can add a fraud alert notifying lenders that you have been a victim of credit fraud. This alert remains on the report for seven years and asks lenders to contact you at the number you provide if someone applies for credit in your name.
  • Active-duty alert: Members of the armed forces on active duty can add an active-duty alert to their credit report to help protect themselves from fraud and identity theft while deployed overseas.
  • Security freeze: Unlike a fraud alert or victim statement, a security freeze prohibits potential new creditors from accessing your credit history at all, unless you first lift the freeze or obtain a special one-time-use PIN that you can provide to the specific lender you are applying with.

There are a number of exemptions to credit freezes, including requests for your credit report by employers, landlords or leasing companies; law enforcement; businesses with which you have an existing relationship; and for purposes of making prescreened credit offers. Unless you forget to thaw your report when you apply for credit, a freeze is typically only triggered in the rare instance in which an identity thief applies for new credit using your information. Lenders are notified of the other alerts anytime your credit report is requested.

While a security freeze might be necessary in some instances, there are times when a fraud alert may be the wiser course of action. A fraud alert may cause a slight delay while your identity is verified, but once that's done, an alert will not prevent the lender from viewing your credit report and granting credit. With a credit freeze, you will have to contact each credit bureau where you have a freeze in place to lift it before your lender can check your credit, then reapply the freeze once the loan application process is finished.

Tips for Preventing Credit Fraud

Credit freezes and fraud alerts will not prevent your identity from being stolen. They can only help prevent use of your stolen identity to commit credit fraud. While it's not possible to completely prevent identity theft from occurring, there are some steps you can take to help protect yourself from becoming a victim:

  1. Safeguard your personal information. Shred any documents that contain personal information before throwing them away. Avoid carrying your Social Security card in your wallet or purse.
  2. Beware of shoulder surfers. Take care when entering your personal information on a computer screen or device while in public.
  3. Create strong passwords and change them often. Never share your password with others.
  4. Check your credit report often. Checking your credit report frequently can help alert you to potential fraud sooner. From now through April 2021, you can receive a free report weekly from each of the credit reporting agencies through AnnualCreditReport.com. You can also get your free credit report and scores directly from Experian anytime.

Thanks for asking.
Jennifer White, Consumer Education Specialist