You've probably heard at one time or another that freezing your credit is a good idea.
Since almost 45% of Americans had their personal information stolen in the Equifax breach in 2017, more people have taken steps to do a credit freeze of their files.
About 20% of Americans secured their credit directly after the breach to try and protect their identity. But, if you haven't frozen your credit yet, you might be wondering if it's still a smart thing to do.
We understand there is often confusion about freezing or securing credit files.
Some mix up doing a credit freeze with actually freezing your credit cards. Money expert Clark Howard suggests the idea of actually freezing your cards in water when you're attempting to get out of debt so you won't use them.
That's not this kind of freeze.
During a credit freeze, you'll still have full access to your existing credit cards, and all lines of credit – so no need to worry! And it won't directly impact your credit score.
Let's take a more in-depth look at:
- What a credit freeze is
- Who should and shouldn't use credit freezes
- How you set up and remove a credit freeze
- Whether you need to add a credit freeze to your list of things to do
What is a Credit Freeze?
A credit freeze (or security freeze) restricts access to your credit report until you lift the freeze. (Although in some states, lifting your freeze is done automatically after some years, so it's important to check credit freeze timelines.)
When your credit file is frozen, data isn't released to creditors or lenders.
Since the goal of hackers is to steal your personal information, claim your identity, and access credit, security freezes make it more difficult for them to rip you off.
Thieves can still access your current lines of credit, but they shouldn't be able to open new accounts in your name.
The credit bureaus won't release your credit information when it's frozen. And most creditors require the ability to view your report before approving a new account.
You (or an identity thief) won't have any access to new credit without “thawing” or lifting the freeze.
A credit freeze does not affect your credit score or the ability for you to monitor your score through a free service. You can also still get access to a free credit report once a year through AnnualCreditReport.com.
Why May I Want to Freeze My Credit?
Everyone should at least consider freezing their credit. Data breaches happen daily – this article describes 17 of the most significant breaches – most occurring in the last decade.
Whether you lose your wallet or suffer a data breach at a medical office, a shopping center, or even through a credit bureau, doing what you can to protect your most sensitive personal information can save you time, money, and a lot of stress!
If you have children, you should also look into whether proactively freezing their file makes sense.
Kids actually shouldn't have a credit file until you or they establish credit in their name.
But many reports show kids are at a much higher risk of having their identity stolen than adults, so you may choose to eliminate access to their file early.
If you have aging parents, it's important to discuss with them freezing their credit too.
In 2017, the Federal Trade Commission reported that 35% of fraud complaints and almost 20% of identity theft complaints impacted seniors (age 60 or older.)
If you're in charge of your parent's finances, freezing their credit files may become a priority to limit their exposure to thefts and crimes related to their identity and investments.
For those of you in the sandwich generation, you may have three generations to consider when it comes to credit freezes and protecting all of your identities.
Once you decide to take action, it will take a little bit of time. Taking steps now to do what you can to protect everyone might be well worth it in the end though.
Why Might I Skip a Credit Freeze?
If you frequently need to open new bank accounts, apply for new credit cards, or if you're getting ready to look for a new apartment, change insurance companies, or request any loans – you might hold off freezing your credit.
Each time a new creditor needs to review your credit file, you will need to lift the freeze. On some occasions, you may want to specify a credit lift for a set period while you are trying to access new credit.
One good thing is many creditors will tell you which bureau to request the freeze lift on so you don't have to do it for each agency.
It's not that lifting a freeze is difficult to do with your PIN; it may just be inconvenient depending on your situation.
There could be a delay in lifting the freeze, however. So if you need immediate access to your credit file for a particular reason, you might hold off placing a freeze.
Previously there were costs associated with lifting a credit freeze for those living in specific states, but those fees to add and remove credit freezes went away for all consumers on 9/21/2018 because of a new law.
Still, make sure you take time to learn about your specific credit freeze and thaw requirements so you can make an informed decision on what to do and not cost yourself any extra time or money.
How Do I Freeze My Credit?
If you decide to freeze your credit, make sure you do it at all three major credit bureaus – Experian, TransUnion, and Equifax.
- Experian has a Credit Freeze Center on their website or by phone at 1-888-397-3742.
- TransUnion has a page to register for a credit freeze, and they can also be reached at 1-888-909-8872.
- Equifax also has a credit freeze registration page, and by phone, you can reach them at 1-800-685-1111.
Unless you were a victim of an identity crime or were part of one of the significant data breaches, placing a freeze on your file often involved fees if you were a resident in some states. As of 9/21/2018, placing and removing credit freezes is now free for everyone because of the Economic Growth, Regulatory Relief, and Consumer Protection Act. This act also allows parents of all minors (under age 16) to place a freeze – even in states previously not allowing them.
How Do I Unfreeze (Thaw) My Credit?
When placing a freeze on your file, you'll set a username, and you'll receive a PIN from each bureau.
It's critical to keep those numbers in a safe place so if you need to lift a credit freeze – you can do so quickly. You may also have to set security questions and answers to verify your identity when you log in.
If you have all the needed documentation, lifting a freeze can happen in just a few minutes. The bureau's do state it could take up to three days though.
- Experian's request to remove a credit freeze page
- Equifax uses the same landing page for a lift as for placing the freeze
- TransUnion's landing page offers “manage an existing freeze” as a choice
The most important thing to remember is, if your credit file is frozen, you may face a delay in having a creditor access it. For some people, this is a problem. But for others, it isn't an issue at all.
Some people think it's also a great way to stop yourself from making an impulse decision to get a new credit card or open a line of credit. The time and work it takes to lift the freeze may be all someone needs to stop themselves from taking on more debt.
Is It Smart To Freeze My Credit?
A credit freeze won't stop hackers from getting your personal information. But it can stop criminals when they try to use your information to open new accounts and steal money, merchandise, and services – leaving a trail of bills and overdue accounts in your name.
It does take some effort to freeze and unfreeze your credit. But you have to decide if it's worth the risk of not putting a freeze on your file.
And if you have kids or elderly parents you take responsibility for, you need to consider the risks of not freezing their records too.
Whether there are security breaches or not, many suggest a credit freeze is still one of the best ways consumers can protect themselves from fraudulent activity and identity theft over time.
Vicki and Amy are authors of Estate Planning 101 – a Crash Course in Planning for the Unexpected -coming soon from Adams Media.