If you’re a credit card holder or if you make online transactions, you may run into a situation where you need to know how to freeze your credit. It’s one way to try to prevent fraud from identity theft by controlling who can access your credit information.
Freezing your credit, also called a security freeze, essentially prevents hard inquiries on your credit histories held by the three main credit bureaus – Experian, Equifax and TransUnion. Any creditor wanting to access your credit report would need to have a PIN.
Is it a Good Idea to Freeze Your Credit?
Freezing your credit has both advantages and disadvantages to consider.
On the one hand, the move can significantly help reduce fraud if you think your personal information has been stolen. It prevents criminals from opening new loans or credit lines in your name, which can both cost you money as well as damage your credit history.
Freezing your credit won’t affect your credit score, but it might affect whether your can get a new credit card or loan.
With a freeze, you can technically still get a loan or a new credit card, but the process is more difficult. Lenders won’t be able to pull your credit history and figure out if you’d be a good borrower without a PIN.
If you lose your PIN number, lenders will likely have to deny you additional credit. They need to know your overall financial picture, including if you have a good balance between the credit that you’ve used and your credit line. Not knowing if you are someone who makes regular timely payments or someone who is routinely late presents a challenge for them to approve you.
Of course, you can contact the credit bureaus to have the freeze temporarily lifted, but you’d need to go through another process of proving your identity.
How Does a Credit Freeze Prevent Fraud?
If a criminal has gotten your personal information, say from reading your credit card information, they may be able to open a new credit card and rack up charges. A credit freeze prevents that by keeping your credit history essentially under lock-and-key from lenders who need it to approve new credit.
Unfortunately, you can still be victimized by identity theft even with a credit freeze. If someone has information on your current accounts, they can take advantage of your existing credit lines.
Your current creditors will have access to your credit reports, whether or not you freeze your credit.
How to Freeze Your Credit Steps
So how to freeze your credit? Freezing your credit is free and you can do it any time. You’ll need to provide information to confirm your identity, such as your Social Security number and birthdate.
When it comes to freezing your credit, you’ll need to contact each of the three credit bureaus. You can either call them or go through their websites. Here’s their contact information:
- Experian: 1-888-397-3742, Experian.com/help
- Equifax: 1-800-349-9960, Equifax.com/personal/credit-report-services
- TransUnion: 1-888-909-8872, TransUnion.com/credit-help
The freeze stays in effect until you contact the credit bureaus and ask to have it removed, either permanently or temporarily. You’ll need to provide your PIN or password to have it lifted.
With a credit freeze, you will still be able to view your credit yourself. Your current creditors will also have access to your credit information. Others who may still access your credit reports include some marketers, government agencies in certain circumstances like child support cases, and (with your permission) employers.
Although, keep in mind that during a credit freeze, some of your information may be withheld from the report.
Finally, note that parents and legal guardians can freeze a child’s credit if the child is under age 16.
Is Freezing the Same as Locking Credit?
Locking your credit is slightly different than freezing credit. All three bureaus are required to provide freezing for free. That freezing comes with strong protections if, for example, the credit bureaus experience a data breach.
However, all three bureaus also offer a locking service, which may cost money.
With locking, you may find the process of opening and closing your account to lenders to be much easier. You can lock and unlock credit from an app. But locking your credit comes with less protection than freezing your account.
Putting a Block on a Credit Card
When considering how to freeze your credit, you might consider that you don’t need a full credit freeze from the credit bureaus. If your credit card has been lost or stolen, the best strategy for preventing theft is to put a block on that credit card.
Call your credit card company as soon as you notice your missing card. Some companies allow you to lock your card online or from your mobile app.
If your card was lost, your credit card issuer can put a block on additional spending on your account in case it was stolen. The credit card freeze can give you time to look for it without completely closing your account.
If your credit card was indeed actually stolen, your issuer will likely cancel your card and issue you a new account number. You should receive a new credit card in the mail, usually within a week.
Under most credit cards’ protection plans, you can have all charges that you did not make removed from your account. Your liability is limited by law under the Fair Credit Billing Act (FCBA) to $50 if you report the charge within 60 days.
But the major credit card issuers have a $0 liability policy. That means you won’t be responsible for charges you didn’t make. The sooner you report your card missing, the better.
Putting a block on a credit card doesn’t affect your credit score because it’s not considered a new account, even though you will have a new account number. Just be sure not to completely close the account.
By opening a new one, you will have to have a “hard pull” on your credit report, which dings your credit score. Also, if you get a new card, be sure you have any bills you are paying automatically with that card updated with the new information. Any declined payments can also affect your credit score.
Other Ways to Protect Your Finances
Aside from credit freezes or credit card blocks, you can take several other important steps to safeguard your money. One of the easiest ways to be on guard for fraud is to regularly review your credit card, investment and bank statements for suspicious activity.
You should also routinely review a copy of your credit report, which you can get for free once a year from the three credit bureaus through AnnualCreditReport.com. Most credit card companies will provide an updated credit score for you each month. Make sure your score makes sense to you. And start to keep an eye on your credit score as a habit.
You can also have your credit accounts monitored by a company like LifeLock that can provide fraud alerts on suspicious changes in your credit score or spending. Weigh the costs and benefits before you enroll.
You can even ask the three major credit bureaus to put a fraud alert on your credit reports. Like with a broader credit freeze, you’ll need to contact each of the bureaus directly. A fraud alert will last 90 days and will be free. You can renew it after the term expires.
Also, always protect your Social Security number, which is the key to your identity. Never carry your Social Security card with you and never provide the number to a someone without knowing why they need it. Always shred documents with your Social Security number on them.
You should also protect your finances by using strong passwords on any account with a bank or credit card company. Change your passwords regularly – and don’t reuse them or use them on multiple accounts.
Finally, if you have several credit cards, try to put only the credit cards that you will use in your wallet or purse. Keep the cards you are not using in a secure place, such as in a safe or locked drawer in your home.
Is an RFID Wallet Worth it?
Many credit card wallets now come with RFID blocking technology that can help reduce the chances of that thieves will steal your card information.
An RFID tag, or Radio-Frequency Identification, is like a small radio transponder in the chips of some credit cards. It transmits data to card readers that identifies that card as yours. Unfortunately, that small transmission can be capture by savvy fraudsters who use readers to copy and use your information.
Now, many wallets have built-in technology that blocks the RFID signals to help keep your card safe. RFID-blocking wallets are no more expensive than any wallet. They come in a variety of brands and designs at many prices points.
Often times, individuals looking for information on how to freeze your credit tend to be wealthy individuals who are no longer focused on building credit. As one’s wealth accumulates, often times, they no longer need credit anymore. In fact, Dave Ramsey often talks about the idea that he’s implemented a full credit freeze on him and his family. Well, the reality is that Dave Ramsey is quite wealthy and doesn’t need to borrow money anymore (he claims he borrows zero money for anything). But it’s not necessarily only the uber wealthy that might consider a credit freeze to be a solid course of action.
If you own a home you plan to be in for a long period of time, have the necessary credit cards already, then you might also consider a credit freeze. If you can’t see a need to apply for credit in any situations coming up, then a credit freeze could definitely make sense considering the protection it offers. Remember, this includes applying for an auto loan, a line of credit for a business, a home equity line of credit or a mortgage refinance (all items that people with excellent credit and decent levels of wealth often still apply for).
I personally went through a period of time with a credit freeze because I knew I had no plans to refinance my home or apply for a new auto loan. I ran into a situation where someone attempted to open a credit card in my name, so I immediately looked up how to freeze your credit. I went ahead and implemented the freeze as soon as possible just to reduce the fraud and identity theft risks. Later, I actually applied for a new credit card because of the introductory benefits being offered and forget I had froze my credit previously. I had to go through a few extra steps to open the account, but overall, it really wasn’t a big deal.
The Bottom Line
If you’ve been the victim of identity theft, such as if someone has filed taxes in your name or is opening new credit cards with your information, a credit freeze is essential. By limiting who can access your credit history, you can prevent fraudsters from getting new loans or credit lines.
However, for most people, going through the process of freezing credit may not be the best route, especially for people who are shopping for credit.
Other options for safeguarding your credit, such as monitoring your statements for suspicious activity or using a fraud alert system, can be more effective at reducing your risk for identity fraud.
Before you make the call on freezing your credit, weigh the advantages of security against the hassle of having your credit history blocked from lenders.