Should I Freeze My Credit?

by Lisa Bigelow December 07, 2018

If you’ve ever reviewed your credit report and discovered unfamiliar activity, you’re not alone. More than 16 million US consumers filed identity theft complaints in 2017.

The scale of theft related to identity theft has reached into the billions of dollars. Because of your credit cards’ fraud protections, you may not be held financially liable for charges by bad actors; however, you will be responsible for clearing your credit history – and that can take a lot of time and effort.

The good news is that the Economic Growth, Regulatory Relief and Consumer Protection Act, a 2018 federal law, enacted powerful consumer protections against financial fraudsters, including the ability for you to “freeze” your credit at no cost. What exactly is a credit freeze? Here are 10 key things to know to take action.

1. What is a credit freeze, and how does it work?
 

Part of the new law gives Americans the right to “freeze” their credit reports for free. A credit freeze (also known as a security freeze) prevents people and businesses from accessing your credit files – a necessary step when establishing any new credit lines, such as a car loan or credit card.

Before September 2018, consumers could ask Equifax, Experian and TransUnion – the major credit bureaus that record and report borrowing data – for a credit lock, which offers similar protections to a credit freeze but for a fee, depending on the state of residency. Now, by law, you can contact the bureaus and get a standardized version of those protections at no charge.
 

2. How do I freeze my credit?
 

To freeze your credit at no charge, contact each of the credit bureaus. You must contact each bureau directly – requesting a freeze at one does not automatically cover the rest. You can request a freeze over the phone or online at each bureau’s website. Following your request, each bureau will issue you a personal identification number. The PIN lets you thaw and refreeze your credit on demand.
 

3. Can I use my credit card while my credit is frozen?
 

Yes, assuming you have available credit and your account is in good standing. Credit freezes only prevent new card accounts from being opened – they do not affect your ability to use existing accounts.

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A credit freeze prevents people and businesses from accessing your credit files – a necessary step when establishing any new credit lines.
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4. Who has access to my credit files when a freeze is in place?
 

You can access your Equifax, Experian and TransUnion credit reports for free once per year at AnnualCreditReport.com. In addition, your current lenders – including your credit card issuers – retain access to your files. If you request a credit line increase from your current card issuer, for example, you will not need to thaw your credit.

Debt collectors and government agencies may also retain access if you have unpaid debts, tax liabilities or judgments on your credit history.
 

5. How do I thaw my credit, and how long does it take?
 

Simply call each bureau – or visit their online security freeze portals – and request a thaw using your PIN. Thaw requests made by mail can take up to three days to take effect, so plan ahead if you know that a lender or another business will need access to your credit files.

Things to consider when thawing your credit include how long you want the thaw to last and how broadly you want to apply it. For example, you can request a one-time thaw for an employer, or a permanent thaw for a specific lender. You can also permanently thaw your credit if you decide the protection is not right for you. There is no fee for thawing and refreezing – even for temporary or one-time occurrences.
 

6. Does a credit freeze protect me from identity theft? When won’t a credit freeze work?
 

A credit freeze is an important tool that helps prevent identity theft, but you’ll still need to monitor your accounts for unfamiliar activity. That’s because a credit freeze does not prevent misuse of your current accounts. If someone obtains your account data before you order a freeze, it’s possible that person could use it to make fraudulent purchases. It also won’t protect you in the event someone files a false tax return using your personal information.

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A credit freeze is an important tool that helps prevent identity theft, but you’ll still need to monitor your accounts for unfamiliar activity.
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7. Is a freeze the only way to protect my credit?
 

No. Another option is the aforementioned “credit lock,” an offering from credit bureaus which bears some important differences from a credit freeze. Unlike a credit freeze, which is governed by state law, a credit lock is a contract between you and the bureau. Credit locks can cost up to $25 per month, depending on the provider and level of services you want. Typical for-fee services include access to credit scores on demand, social security number monitoring and identity theft insurance. These services are not currently part of credit freeze protections.

To unlock your credit, you’ll use a mobile app instead of a PIN. It’s important to note that employers and others may still be able to view your credit history even if you have a lock in place, depending on the state where you live. Read each credit bureau’s credit lock terms and conditions to learn more.
 

8. I’m active duty military. Do I get any special benefits?
 

Yes. Active duty service members and their spouses are entitled to free electronic credit monitoring services and education. If you are active duty military, get in touch with your on-base personal financial manager.
 

9. How else can I protect myself from financial fraud and identity theft?
 

There are several things you can consider doing.

Ask each bureau for a fraud alert. A fraud alert requires new lenders and others establishing a new account in your name to take extra steps to verify your identity. As of September 2018, a fraud alert expires after one year. Victims of identity theft who can document their case qualify for extended fraud alert protection of seven years.

Check transactions regularly. Remember, neither a freeze nor a lock protects your existing card accounts. Review your purchase activity regularly, and notify lenders and others immediately if you notice fraudulent charges.

Check your credit reports once per year. It’s free when you visit AnnualCreditReport.com.

Other tips include setting up automated notifications when unusual spending occurs, using difficult-to-remember passwords, using different passwords for each online account, and only providing your social security number when absolutely necessary.

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Review your purchase activity regularly, and notify lenders and others immediately if you notice fraudulent charges.
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Lisa Bigelow creates content for Citi’s Global Consumer Bank. She has written credit education and personal finance content for 10 years.

 

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.