What Is A “Credit Freeze”
Before you freeze your credit it is important to understand exactly what a credit freeze is. Freezing your credit requires contacting the three credit bureaus (Experian, TransUnion, and Equifax) and requesting a freeze on your credit through each of their respective credit freeze processes. Once you have completed this with each of the agencies your credit is frozen and no changes can be made to your credit report. This means that no credit checks, new loans, new credit cards, or other report related information can be accessed by you or anyone else until you unfreeze your credit.
While it may seem like a hassle to freeze your credit (and truly, it is) there is an upside to the process. Once your credit is frozen, you are completely protected against ID theft unless your credit is unfrozen. During the credit freeze process you are provided with a PIN number which is required to remove a credit freeze on your account so only you will be able to unfreeze your credit. The upside to a credit freeze is that you can rest easy that your credit will not be used by someone else.
Congress has recently amended the Fair Credit Reporting Act to include provisions that the major credit bureaus must provide free credit freezes for customers (previously there was a fee associated with each time you froze your credit report). This change was a result of the updates that Congress made following the Equifax Security Breach where information of millions of United States citizens was hacked. This change allows customers to control their credit reports by freezing their account and no longer comes with any sort of fee.
Are There Reasons Not To Freeze Your Credit?
While it is a bit of a hassle to go through the process of contacting each credit agency to freeze your credit, once completed you are very well protected against identity theft. Because of this many people probably assume this is a good idea and they may as well go ahead and freeze their credit. The downside to this process is that anytime your credit needs to be accessed you will be required to unfreeze your report with each agency and then refreeze your account once completed.
At first, this too may not seem like much of a hassle but credit reports are being used for more and more things. For instance, some commonly incurred credit pulls that you may not have been aware of include things like:
- Completing an application for an apartment rental
- Applying for new automobile, rental, or home insurance
- Applying for a new job (company background check)
- Setting up new cell phone service with a new provider
- Getting new internet or cable service set up at your home
- And of course – new credit cards and loans
With this list in mind, you should remember that the credit agencies have up to three days time to unfreeze your credit once your request has been submitted. Most of the time, the unfreeze process will be much quicker (often completed within hours) but given that this is not an immediate process, it is important to anticipate any unexpected need to unfreeze your credit or you may be put in to a tight spot.
One additional thing consumers may notice after freezing their credit is that they no longer will receive pre-screened credit offers. Once your credit report is frozen it is inaccessible to anyone so for this reason you will not longer receive pre-qualification notices for credit offers, insurance offers, and more. Depending on your perspective, this could be a great positive (less “junk” mail) or a negative (missing out on great offers).
Final Thoughts – Freeze or Not to Freeze
Ultimately this will come down to the individual. If you are worried about Identity Theft (which everyone should be to at least some extent) it could provide you with some peace of mind. For individuals who regularly stay on top of their credit or use credit monitoring services, it may turn out to be a much bigger hassle to freeze and unfreeze your credit than the perceived risk of ID Theft.
Freezing your credit is a very effective method to prevent ID Theft but it also presents some hassles. In addition to contacting the credit agencies you also will need to keep track of your PIN numbers to unfreeze your reports. Additionally, if you enjoy getting credit/loan/insurance offers tailored to your credit profile you may also want to consider keeping your credit unfrozen. There are many resources available to monitor your credit but at the end of the day the absolute safest way to keep your ID from being stolen is to always keep your credit frozen until you know you will need access.