The experience of having your personal data compromised is so common it is just about normal these days. Nearly half (47%) of Americans experienced financial identity theft in 2020, with losses totaling $712.4 billion, according to a recent report by Aite Group, an independent research and advisory firm.
If you’re a victim of a data breach or you suspect your identity may have been stolen, you should consider freezing your credit. When you freeze your credit, it prevents criminals from accessing your credit report or opening new accounts in your name.
While a credit freeze won’t undo any criminal activity that’s already taken place, it can protect you from further fraud. Here’s what you need to know about credit freezes and how to set them up.
What is a credit freeze and how does it work?
A credit freeze is a free service that restricts access to your credit file. When you freeze your credit, you prevent anyone who might have access to your Social Security number or personal information from accessing your credit report. The purpose of a credit freeze is to prevent new accounts from being opened using your information.
Credit freezes can greatly reduce the chances of financial fraud if someone gets a hold of your personal data, but it also means you won’t be able to apply for new credit while your account is frozen. Luckily, you can unfreeze your credit as needed, in case you have a loan or credit application in the works.
When you freeze your credit, you’ll need to complete the process with all three credit reporting agencies: TransUnion, Equifax and Experian.
Who can still see my credit during a credit freeze?
During a credit freeze, most people will not be able to access your credit report. However, there are a few exceptions. Federal law allows certain inquiries into your credit file regardless of a security freeze, including:
- Insurance inquiries
- Updates about your payment or account history from a current creditor
- Credit card preapprovals
- Rental checks
- Job applications
How to freeze your credit
Freezing your credit is a fairly easy process, though you’ll need to repeat the process with each of the three major credit reporting agencies. The fastest and most convenient way to freeze your credit is online, although you can also place a security freeze over the phone.
Here’s how the process works:
1. Visit the credit bureau’s security freeze webpage or call its number
To get started, you’ll need to either call each bureau or visit its security freeze webpage to add a freeze. The credit bureau credit freeze webpages and phone numbers are:
- Equifax – 1-800-349-9960
- Experian – 1-888‑397‑3742
- TransUnion – 1-888-909-8872
2. Provide details about yourself
Next, you’ll need to provide your personal information, including your SSN, address and date of birth. In addition, you’ll be asked to verify your identity by answering some multiple-choice questions only you would know the answer to. A typical question is, “What is the name of the credit card you applied for in August of 2020?”
After this step, you’ll be able to freeze your credit with Transunion and Equifax. Experian has one additional step.
3. Save your PIN (Experian only)
Once your identity has been verified and your security freeze has been placed, you may be provided with a personal identification number you can use to freeze and unfreeze your credit. PINs are typically emailed to the address you provided or texted to your phone. Look out for it and keep it in a safe place -- you’ll need it to lift the security freeze if you want to apply for a credit card or a loan one day.
How to unfreeze your credit
When you’re ready to apply for credit cards or loans, you’ll need to unfreeze your credit or creditors will be unable to access your file. Reversing a security freeze is similar to placing one. Follow these steps to unfreeze your credit:
- Call each credit bureau or visit the credit bureau’s webpage and choose to lift a security freeze.
- Provide your identifying information, including your SSN and date of birth.
- If you were issued a PIN, you’ll need to provide it. If you’ve lost or forgotten your PIN, follow the steps to reset it.
- Choose the effective date when you’d like to lift the freeze.
- Select the end date when you’d like to reinstate it.
You can lift a security freeze the day you request that. However, once the freeze is removed, anyone can ruin your credit, so keep an eye on your reports during this time. If you’re only temporarily unfreezing your credit, you’ll want to avoid leaving your accounts unfrozen too long. Adding a date for the freeze to take effect again is a good idea to avoid being exposed any longer than necessary.
Most creditors understand the importance of safeguarding your identity and are willing to work with you to temporarily lift a credit freeze, if needed. When I froze my credit, a utility company asked me to unfreeze one bureau’s report for three business days. Within 24 hours, I was notified that the utility company had pulled my credit file, so I was able to add the security freeze back right away.
Similarly, when I applied for a mortgage, the broker asked me to unfreeze my credit reports on a certain day. By keeping in touch with the company making the credit inquiry, I was able to make it so my credit was only open for a total of 3 hours.
When a credit freeze makes sense
A credit freeze isn’t necessary for everyone, but can be a lifesaver if your personal data ever gets in the wrong hands. “These frauds can wreak havoc on your credit score, which often takes years to reverse,” says John Li, co-founder and CTO of Fig Loans. “A credit freeze offers another level of protection against them.” A credit freeze is a good idea for anyone who believes their personal information has been compromised and wants to protect their identity. A credit freeze makes the most sense if:
- You’ve lost your Social Security card.
- You’ve had mail stolen.
- You were contacted by a company about a possible data breach.
- You worry about your children’s identity being compromised.
- You’re planning on making a major purchase that requires good credit, such as buying a home or a vehicle.
And when it doesn’t
There are times when a credit freeze may not be helpful. Li explains, “A credit freeze won’t affect your current accounts, so if thieves get access to those, you’ll need to contact your lenders directly to secure or cancel your accounts.” Other instances when a credit freeze may not be ideal include:
- When credit inquiries are frequent: If you’re in a life stage that requires lots of credit inquiries, such as applying for credit cards or buying and setting up a new home, a security freeze may not make sense.
- You’re signed up for credit monitoring: An identity theft protection or credit monitoring service may be able to watch your credit file without locking it up.
- To prevent negative reporting: If you’re hoping to block a current creditor from placing a negative mark on your account, a security freeze won’t help. They’re meant to stop new inquiries, not updates from a current creditor.
If any of those instances apply to you, putting a fraud alert in place may be a better alternative. If someone makes an inquiry, the credit check will be paused until the creditor confirms your identity.
Regardless of whether or not you choose to freeze your credit, be sure to safeguard your personal information by securing your mail and keeping important documents in a safe place.
A credit freeze will not hurt your credit score, but you’ll need to lift it if you’re planning to apply for a credit card or a loan.
If you’d like to authorize a company or individual to run a credit inquiry, you typically need to unfreeze all three credit reports. However, some creditors only use one credit reporting agency and don’t check all three, so you may only need to unlock one report.
You can request a free credit freeze for your child if they’re under the age of 16. To place a freeze on your child’s credit, you will need to contact each credit bureau, fill out the necessary documentation, and provide copies of your ID, your birth certificate and your child’s, Social Security cards for you and your child, and a utility bill to verify your address.
A credit freeze blocks new credit inquiries. A fraud alert pauses inquiries until the creditor can verify it’s you. It’s easier to put a fraud alert into place, but a freeze is more effective at protecting your credit.
A credit freeze and credit lock both have the same result: They restrict access to your credit. They both can be “turned on” and “turned off,” although credit locks are typically easier to unfreeze. The main difference, however, is that a credit freeze is free by law, whereas credit locks are services offered by the credit bureaus that come with a monthly fee.
First published on Aug. 25, 2021 at 10:00 a.m. PT.