What is a Credit Freeze?

When someone compromises your personal information, you’ll be at risk of arrest, denial of credit, unexpected tax bills and identity theft. Over the recent past, data breaches have increased in severity and frequency. Many Americans have experienced the theft of personal information such as Social Security numbers and passport numbers. If, for some reason, you think that you are at risk of identity theft, you may want to consider a credit freeze.

Credit Freeze: Definition

A credit freeze or a security freeze prevents businesses from making inquiries on your credit report. Without permission for creditors to access your credit report, it becomes harder for perpetrators to open any fraudulent accounts. 

Note: even with a credit freeze in place, you will be able to access your own credit score and report. 

Freezing and unfreezing credit reports is free with the major credit bureaus. All you have to do is request for the freeze via phone or online and it will be applied in one business day. If you make the request by mail, it will be done in three business days. 

You will have a PIN provided by the bureaus or you (depending on the bureau) with which you can lift the freeze. You can also decide to lift the freeze temporarily and specify the duration of the lift. If you want faster results while asking for a temporary lift, you are better off asking over the phone or online. The freeze will be lifted in an hour.

If you request the lift by mail, you can expect the lift to be effective in three business days. Note that a freeze won’t prevent companies from pulling your report to see if you are right for credit card offers. And don’t be surprised if you still receive pre-approved credit offers with a freeze in place. 

If you like, you can also ask smaller credit bureaus to freeze your report. But you may be charged a fee for freezing and unfreezing. 

Credit Freeze Alternatives

Your other option to protect yourself against identity theft is a fraud alert. But it is weaker than a credit freeze. A fraud alert forces companies to verify your identity using additional steps before they can access your report. With a credit freeze, a company can only check your report once it is lifted. 

There is another subscription-based service offered by the major credit bureaus. It works like a credit freeze. You lock and unlock your report via a mobile app online. For this service, you have to pay a monthly fee—the amount varies by credit bureau. 

Warning: note that this subscription-based service isn’t governed by federal law. They can change the terms as they wish. 

Should You Opt for a Credit Freeze?

A credit freeze will not guarantee your protection 100%. For instance, a company may decide to give a loan without checking your credit. Additionally, there are other types of crimes such as tax crimes that can be committed using your personal information. 

So this is entirely up to you.

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