If you’ve been paying attention to the world of credit, you’ve probably heard a lot about credit freezes lately. A credit freeze can be a valuable tool for those who may be concerned about identity theft. However, many people are unaware of how credit freezes work and how to use them.
What is a credit freeze and how does it work? How do you place a freeze on your credit report? Is a credit freeze worth it? Will placing a freeze on your credit interfere with your tradelines posting?
Keep reading for the answers to these questions and more.
What a credit freeze does is it blocks lenders and business from accessing your credit file without your consent. This helps to prevent identity theft in the case of a criminal trying to open a fraudulent credit account in your name.
However, a credit freeze does not block access for all businesses; rather, it only pertains to companies with which you do not have an existing relationship. Lenders that you currently have a relationship with can still access your credit file, such as your credit card issuers, your auto lender, etc.
In addition, if you have an account in collections and your lender hires a collection agency, the collection agency can also view your credit report.
A credit freeze also does not prevent you from accessing your own credit report, including your free annual credit report from each credit reporting agency.
You may want to consider freezing your credit if you have been a victim of identity theft or suspect you may be a victim of identity theft.
Here are some signs of potentially fraudulent activity in your name that Experian says to watch out for:
If any of these situations apply to you, you may have an elevated risk of becoming a victim of identity theft, which means it may be a good idea to freeze your credit.
The way that credit freezes work is governed by federal law. Each of the major credit bureaus is required to provide credit freezes to consumers within a certain time frame.
If you request a security freeze online or over the phone, the law mandates that the freeze must be put in place by the next business day. When you want to lift the freeze to apply for credit, the credit bureaus must “thaw” your credit report within an hour of your request.
If you send your request to place or lift a freeze in the mail, the credit reporting agencies have up to three days after they receive your request to take the appropriate action.
When you place a credit freeze, the credit bureaus will provide you with a PIN or password. You will need this PIN or password to lift the freeze, so it’s important to store it securely. When you want to remove the freeze temporarily or permanently, you can contact the credit bureaus and provide your PIN or password and they will lift the freeze.
When it comes time to lift a freeze temporarily to apply for credit or employment, it’s worth asking which credit bureau the lender or employer is planning to pull your report from, so that you only have to lift the freeze with that specific bureau. If you are not sure which bureau they will use, you will need to contact each bureau to lift all of the freezes on your reports.
A credit freeze can certainly help reduce the risk of identity theft by preventing scammers from opening new credit accounts in your name.
However, a credit freeze will not protect you against identity theft in cases where someone has already accessed your financial information, such as if your bank account password was stolen by a hacker or exposed in a data breach.
It’s always a good idea to check your credit reports regularly to watch out for fraudulent activity, whether you have a freeze on your credit file or not. If you are concerned about identity theft, placing a security freeze on your credit may give you some additional peace of mind.
Since credit freezes are guaranteed by federal law, if someone were to open a fraudulent account in your name while your credit is frozen, you would not be held liable for the financial losses incurred.
The length of time that a credit freeze stays in effect varies depending on which state you live in.
In most states, credit freezes are in place permanently until the consumer decides to lift them, whether temporarily or permanently. However, some states set automatic expiration dates for security freezes a number of years after they were originally placed.
In Kentucky, Nebraska, and Pennsylvania, credit security freezes automatically expire 7 years from the date of placement. In all other states, they are permanent until removed by the consumer.
If you want to learn more about credit freeze regulations in your state, creditcards.com has a useful resource that summarizes the laws in all 50 states.
Thanks to the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was passed in 2018, the credit bureaus are now required to provide free credit freezes to consumers.
It is completely free to place a freeze on each of your credit reports. In addition, it is also free to temporarily lift the freeze and then reinstate it, which is important to do when applying for credit or buying tradelines, as we will discuss below.
To place a security freeze on your credit file, you will need to contact each credit bureau (Equifax, Experian, TransUnion, and Innovis) and be ready to provide personal information such as your name, address, date of birth, and social security number.
Unfortunately, since the credit reporting agencies are all separate private companies, there is no integrated system in place where you can request a freeze once and have it apply to all of your credit reports. Instead, you have to work with each of the credit bureaus individually in order to place or lift a credit freeze.
In many cases, it is possible to initiate a credit freeze online by visiting each credit bureau’s website and filling out a form. In some cases, they may ask you to send documentation verifying your identity via mail before issuing the freeze.
Given the proliferation of synthetic identity fraud using stolen SSNs, which we talked about in our article about CPNs, many credit experts recommend freezing your child’s credit to protect them from identity theft. You don’t want to wait until your child is an adult and ready to apply for credit to find out that their credit has been ruined by a criminal that stole their identity years ago.
If you have children under the age of 16, federal law allows you to freeze their credit. Although most children do not have credit files yet, when you request a credit freeze, the bureaus will create a credit file for your child and then freeze it.
When you freeze your child’s credit report, just like when you freeze your own credit file, remember that you will need to keep the PIN in a secure place and you should be prepared to “thaw” their file when the time comes for them to apply for credit.
While they sound similar and are often confused, a credit freeze, a credit lock, and a fraud alert are all different things.
A fraud alert is an alert placed on your credit report that lets potential lenders know that you may have been a victim of fraud.
It is similar to a credit freeze, but instead of simply preventing lenders from seeing your credit report, it allows them to obtain a copy if they take extra steps to verify your identity and that you are the person applying for credit, such as calling you on the phone.
Like a credit freeze, a fraud alert may help to prevent fraudulent accounts being opened in your name, but cannot stop someone who already has access to your accounts.
Unlike a credit freeze, fraud alerts are temporary. A normal fraud alert for someone who has not been the victim of identity theft lasts for one year. Victims of identity theft can get an extended fraud alert, which lasts for seven years. Those serving in the military can use an active duty military alert, which lasts one year and is renewable as long as you are deployed.
Fraud alerts are free. Conveniently, when you request a fraud alert, you only have to contact one credit bureau. That bureau must then contact the other two major bureaus and all three of them will implement a fraud alert on your respective credit reports.
A credit lock is also similar to a credit freeze, but it does have some important distinctions. One of the main ways in which a credit lock differs from a credit freeze is that it is more convenient to unlock your credit than it is to lift a credit freeze.
While lifting a credit freeze requires you to provide the PIN that you were given when you placed the freeze, a credit lock can be undone in seconds and without a PIN online or using an app on your phone.
Credit locks are not covered by the federal law that regulates credit freezes and fraud alerts, so the credit bureaus are allowed to charge fees for providing credit locks. Consequently, placing a lock on your credit often comes with monthly fees.
In addition, a credit lock is simply a business arrangement between you and the credit bureaus and is not regulated by federal law. Therefore, the credit bureaus can’t necessarily be held responsible if someone does manage to fraudulently open an account in your name while you have a credit lock in place.
Some credit locks may come with forced arbitration agreements in the contract, meaning that if you have a dispute with the credit bureau, it must be resolved by arbitration instead of taking them to court.
Unfortunately, credit freezes and tradelines do not mix.
The reason for this is simply that the purpose of a credit freeze is to block anyone from accessing your credit file. This, of course, includes the banks that you may buy tradelines from.
Therefore, if you have a credit freeze placed on your file, there is a good chance that it will prevent the tradelines from posting to your credit report.
The same goes for fraud alerts and credit blocks, which also restrict access to your credit file and thus prevent tradelines from posting.
For this reason, our non-posting guarantee requires that you lift all credit freezes, credit locks, and fraud alerts before placing a tradeline order with us.
For more tips on making sure your tradelines post successfully, check out “How to Get Tradelines to Post.”
A credit freeze is a tool that allows you to prevent others from accessing your credit report, which makes it harder for criminals to open fraudulent accounts in your name and thus helps to protect you from identity theft.
Placing a security freeze on your credit report is free and it does not affect your credit score, so it may be a good idea, particularly for consumers who are concerned about identity theft.
Unfortunately, the credit bureaus and banks have left themselves vulnerable to cyberattacks, and it has become commonplace for hackers to gain access to and expose the personal information of millions of consumers at a time. Therefore, virtually all savvy consumers are likely to be concerned about protecting their identity and sensitive financial information.
However, there are some things to keep in mind when considering placing a security freeze on your credit file.
Firstly, it is important to remember that you must lift a credit freeze before applying for credit. If you don’t, since the credit freeze will block the lender from accessing your file, your application could be delayed or denied altogether. You’ll need to carefully keep track of the information required to lift your credit freezes, such as a PIN or password.
Because of the hassle of unfreezing and refreezing your credit report, you might want to postpone placing a freeze on your credit if you are about to apply for a mortgage, an auto loan, or another type of new credit.
In addition, if you are planning to purchase authorized user tradelines, it is vital to remove all credit freezes, fraud alerts, and credit locks of any kind before buying tradelines, or else they will prevent your tradelines from being added to your credit report.
To summarize, a credit freeze can be a highly valuable tool in protecting your credit health—just be sure to remove any security freezes on your credit report before applying for credit or buying tradelines.
Now that you are familiar with the ins and outs of how credit freezes work, let us know what you think. Do you plan to get a credit freeze? Do you have a credit freeze in place already? Share your thoughts below!