Thinking about freezing your credit report? Generally, a credit freeze can serve two primary purposes:
- To help prevent identity theft
- To help you think twice before applying for new forms of credit
In the past, there were fees associated with both freezing and unfreezing one’s credit information. But after the 2017 Equifax data breach and the implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act, people now have the ability to freeze and unfreeze their credit for free.
What Is a Credit Freeze?
Freezing your credit reports means that your personal financial information is protected and therefore not accessible to any inquiring parties. A security freeze or credit lock are two other terms used to discuss credit report freezes. When your credit report is frozen, access to your credit info and credit history is blocked to any lender or card issuer until you lift the freeze.
When potential borrowers apply for loans or lines of credit, lenders perform what is called a hard credit check. Hard credit checks help potential lenders gather personal data reported on by credit bureaus and assess whether a borrower is a suitable lending risk. Suppose a borrower’s financial information shows too many hard credit checks, a high amount of debt, or evidence of other risky financial behavior. In that case, lenders may decide they are not a reasonable lending risk and deny their application.
Usually, it’s impossible to complete financial tasks like opening up a bank account, inquiring about a quick cash loan online, or applying for a credit card without going through a hard credit check. When someone’s credit is frozen their financial information cannot be accessed, making it impossible to perform a hard credit check.
Here are a few examples of financial services you won’t be able to access with a credit lock:
- Student loans
- Personal loans
- Credit accounts like credit cards or other lines of credit
If you want to access any of these financing options, you should put any pending credit freezes on hold or temporarily lift the freeze on your credit until you have the money you need.
How Will a Credit Freeze Affect My Credit Score?
Will freezing your credit affect your credit score or FICO score? The short answer is no. While too many hard credit checks can have a negative impact on your credit, there is no penalty for lack of hard credit checks whatsoever. In fact, freezing your credit may help prevent you from applying for loans or credit lines you don’t really need. Under certain circumstances, freezing credit may help you focus on paying off existing debt instead of acquiring new financial accounts, which will actually have a positive impact on your credit score over time.
While freezing and unfreezing (also known as thawing) credit came with a fee, it’s now a free service offered by the major credit reporting agencies. This lack of expense makes freezing your credit a smart option to consider if you want to protect your financial information or prevent yourself from acquiring new debts.
It’s essential to keep in mind that there are still a few organizations that will have access to your financial data despite a credit report freeze. Employers, insurance companies looking to compile insurance statements, and certain debt collectors typically always have access to the financial information they need.
How to Freeze Credit Reports With the Major Credit Reporting Agencies
Generally, there are three major credit bureaus or credit reporting companies. The main three credit reporting companies are Equifax, Experian, and TransUnion. While each company is a separate third-party entity when it comes to credit reporting, you can freeze your credit reports with the three credit bureaus in a similar way.
If you want to freeze your credit reports with Equifax online, you can create a myEquifax account on their website and request a freeze through the portal. Once completed, you should receive a notification via text or email letting you know your credit file is frozen.
If you want to freeze your credit reports online with Experian, you can go to their Freeze Center and create a user account. From there, you can request a freeze of your credit through the Experian website.
When it comes to TransUnion, freezing credit online is the most prominent method they offer. Straight from the TransUnion credit freezing page, you can fill out a quick online form to request your credit security freeze.
If you want to freeze your credit reports over the phone, you can call Equifax at 1-888-298-0045 or by calling Experian at 1-888-397-3742. When calling, simply inform the representative on the phone that you would like to put a freeze on your credit report. At that point, your representative will be able to walk you through the process of successfully freezing your credit report.
Perhaps you are not in a rush, and you would like to submit a freeze request via mail. In that case you can print out your online form and send it to Equifax at Equifax Information Services LLC P.O. Box 105788 Atlanta, GA 30348-5788 or to Experian at Experian Security Freeze, P.O. Box 9554, Allen, TX 75013.
If you are looking to freeze your credit reports quickly, online is probably the best method for most credit bureaus. Putting a freeze on your credit report via mail can take days or weeks, while requesting a credit report freeze online may take just a few hours to complete.
Why Would You Freeze Your Credit?
You may want to put a credit freeze in place if you think you may be vulnerable to identity theft and would like some extra financial protection. Another reason you may want to put credit locks in place would be if you were trying to limit your credit inquiries and organize your finances.
When identity thieves steal your credit information, they often have the ability to perform tasks like opening a new credit account or spending money via existing credit lines. Both of these actions have the ability to significantly affect credit in a negative way if left unmonitored.
But, keep in mind a credit freeze prevents lenders and credit card companies from gaining access to your personal financial information. Because of this, you can stop potential identity thieves from ever gaining access to your data by putting a freeze on your credit. Also, if you ever find yourself in a situation where you need money fast, you can temporarily lift your credit freeze in order to apply for a credit line or any other kind of new credit accounts.
How Can I Protect My Credit Report Without Freezing My Credit?
Thankfully, there are several ways to go about defending your financial information and credit report beyond credit freezes. Checking your own credit score regularly or partaking in credit monitoring services are both ways you can protect your financial data as well as help prevent identity theft.
After the 2017 Equifax data breach, almost every single credit bureau offered a period of free credit monitoring services. But after a certain amount of time, services stopped being free and were available for a fee. Your credit files are kept under an extra close watch with credit monitoring. You are also issued a fraud alert if there is any suspicious activity.
Activity that might warrant fraud alerts could be a high number of credit inquiries within a short period of time, credit spending at an extremely high rate, or purchases made from locations well outside of your regular areas.
You can also get your credit report for free anytime you’d like via a soft credit check. By checking your credit score often, you can get familiar with your score and how your usual financial activity impacts your score. That way, if you see any suspicious activity or a sudden dip in your credit score, you’ll know right away. Then, you can inform the proper authorities to help you rectify the situation.
Protecting your financial information and preventing identity theft is important and should be a priority. By freezing credit, signing up for credit monitoring, or checking your score often, you can help protect your finances and set yourself up for success!