6 Things to Know Before Freezing Your Credit

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Through April 20, 2022, 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.

A credit freeze is something you can put in place to limit others from viewing your credit reports, including lenders. Freezing your credit is an extreme step, but it's something that might be necessary if you're dealing with identity theft and other measures, such as fraud alerts, haven't been effective for you.

Because a credit freeze stops most lenders and service providers from obtaining your credit report, you will have to lift the freeze before making any applications for new credit. Freezing your credit report simply as a preventive measure may cause undue inconvenience. Before you request a credit freeze, there are some things to keep in mind and alternatives to look into.

Before You Freeze Your Credit

The process of freezing and unfreezing your credit can be done in a few minutes with each credit reporting agency (Experian, TransUnion and Equifax), but that doesn't mean it's an action to be taken lightly. Here are six things to understand before you start the process:

1. Know What a Credit Freeze Is

A credit freeze is a tool consumers can use to help protect themselves against credit fraud. When you freeze your credit reports, most companies are blocked from viewing them until you "thaw" the freeze.

When lenders can't view your credit report, they can't extend credit. This means that if someone has managed to steal your Social Security number and other personal information, they won't be able to open fraudulent credit accounts in your name.

That said, a credit freeze will also make it impossible for you to get approved for credit unless you lift it temporarily or permanently.

2. Understand the Credit Freeze Process

You'll need to file a credit freeze request with all three major credit bureaus for it to be effective. During the process, you'll need to answer a handful of questions to verify your identity.

You'll also need to provide your Social Security number, a copy of a photo ID and proof of residence, such as a recent utility bill. Depending on the bureau, you may get a PIN you can use to freeze and unfreeze your report in the future.

If you plan to apply for credit with a security freeze on your credit reports, you'll need to lift the freezes, either temporarily or permanently, before you apply to ensure the lender can view your reports during its credit check.

3. You Can Freeze Your Credit for Free

There is no fee associated with freezing or thawing your credit. Until recently, credit freezes carried fees that varied by state, but they're now free regardless of where you live in the U.S.

It's also free regardless of whether you've been a victim of identity theft. In the past, victims of identity theft may have had their fees waived, but now credit freezes are available for free to everyone.

4. Know That a Freeze Doesn't Protect Everything

A credit freeze can prevent someone from committing credit fraud by opening a credit account in your name without your permission. It can't, however, protect you from having your identity stolen. A credit freeze has never prevented identity theft. Its purpose is to prevent use of your stolen identity to commit fraud against you.

If someone steals your credit card number, they can still use your credit account to make unauthorized purchases. Also, if someone steals your Social Security number, a credit freeze won't prevent them from filing fraudulent tax returns and health insurance claims in your name.

As a result, it's important to remain vigilant in other areas of your financial life, especially if you're certain that someone has stolen your personal information.

5. You Might Experience Credit Delays

Credit freezes can create delays and problems when access to your credit reports is needed quickly. This can happen when you apply for a loan or credit card; however, if you are applying for a job, trying to rent an apartment or applying for insurance, a credit freeze will not impact you.

Companies typically won't extend credit if one or more of your credit reports are frozen. If you request a credit thaw online or by phone, the credit bureaus are required by law to complete the request within an hour. Requests via snail mail can take a few days, however.

Even with a fast turnaround time, it can cause delays if you forget to thaw your credit before you apply for something that requires a credit check. Delays can also result if you forget or lose your required PIN or password and need to work with a bureau to recover it. You can avoid these delays by thinking ahead and lifting your credit freeze before you submit an application for a credit card, loan, lease or insurance policy.

6. Explore Your Other Options

Freezing your credit usually isn't necessary if you've never been a victim of identity theft of fraud. If you think your information has been compromised, a fraud alert may be sufficient. It will let lenders know to verify the applicant is really you before opening a new account, while still allowing you to access credit when you need it. The exception is instant credit—because lenders take extra steps to verify your identity when you have a fraud alert on file, you may find that you won't be able to be approved for credit instantly in stores.

Deciding between a fraud alert and a credit freeze is up to you. A fraud alert is better if you're concerned your information may have been compromised but don't yet have evidence of fraud, or if you want to protect yourself but intend to apply for credit in the near future and don't want to deal with freezing and unfreezing your credit.

When you add a fraud alert to your Experian credit report, the other two credit bureaus will be notified (this is not the case with a credit freeze). The initial fraud alert, which lasts up to one year unless you cancel it sooner, provides a free credit report you can review. If you feel you need an extended fraud alert, which lasts up to seven years unless you cancel it sooner, you'll receive additional free credit reports. You can also provide a phone number instructing lenders to contact you if someone applies for credit in your name, and you'll get an instant alert to potential fraud.

If you've been victimized by identity fraud even with a fraud alert in place, a credit freeze may be helpful.

And whether you freeze your credit or go with a fraud alert, credit monitoring helps you spot potential fraud so you're able to more quickly address it. With Experian's free credit monitoring service, you'll get access to your FICO® Score powered by Experian data, as well as real-time alerts about new credit inquiries and accounts on your Experian credit report.

How to Freeze Your Credit for Free

You'll want to place a free credit freeze on all three of your credit reports, including from Experian, Equifax and TransUnion. That said, the process can vary from agency to agency.

With Experian, you can visit the Experian Freeze Center and request it online or call 888-397-3742. Provide the requested information and verify your identity to complete the process.

If you need to lift your credit in the future, you can do so by visiting your online account with each credit bureau or calling.

Does a Credit Freeze Affect Your Credit Score?

A credit freeze won't have any impact on your credit score, nor will it impact your current credit accounts.

While a credit freeze won't affect your credit score in any way, it will impact your ability to qualify for a loan or credit card unless you thaw your credit before submitting your application. If you're lifting the freeze temporarily, make sure you have enough time to complete the loan application and underwriting process.

A Credit Freeze Is Helpful but Not a Cure-All

A credit freeze can help reduce your exposure if you suspect identity theft, but it won't eliminate it entirely.

It's important to keep track of your credit score and check your credit reports regularly. You can get a copy of each of your credit reports every 12 months through AnnualCreditReport.com, and you can access your free Experian credit report anytime. Now through April 2021, you can receive a free credit report from each of the bureaus once a week from AnnualCreditReport.com.

As you stay on top of your credit scores and reports, you'll be in a good position to detect potential fraud sooner, minimizing any damage to your credit history.

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