Should You Freeze Your Credit File?
A credit freeze, also known as a security freeze, prevents lenders and other companies from accessing your credit report and credit scores. Without being able to evaluate your creditworthiness, it is unlikely that these companies will approve new credit applications. Having a credit freeze in place greatly reduces the chance that fraudsters will be able to open credit accounts in your name.
If you have already been a victim of identity theft, you should strongly consider requesting a credit freeze with all three credit bureaus: Transunion, Experian, and Equifax. A credit freeze is also worth considering if you suspect someone has stolen, or otherwise obtained, your Social Security Number or other confidential information that can be used to open credit in your name. Stolen personal information can be sold and traded among criminals, so it is possible that identity theft may occur months, or even years, after your personal information has been compromised.
A credit freeze can also have drawbacks. While a freeze is in place, even those you’ve authorized to access your credit files are blocked from doing so. This includes any request or application you make for a new loan, credit card, rental housing, employment, utilities or cell phone. You can unfreeze your file at any time by using a PIN that is provided when you place your credit freeze; however, it can take up to three business days for your file to become accessible. This can cause a substantial inconvenience if you need an immediate extension of credit in the case of emergency, such as an unexpected home repair.
It is also important to know that a credit freeze is not foolproof in preventing fraudsters from accessing existing credit accounts in your name to make changes, purchases or withdraw money. These actions do not require accessing your credit file, so it is important to be diligent and monitor all bank, loan and credit card statements for fraudulent transactions.
If you are not a victim of identity theft, but fear you could become one, an alternate to a credit freeze is placing a fraud alert on your credit file. When an alert is in place, your credit file will be accessible, but creditors must take reasonable steps to verify your identity before granting credit. Unlike a credit freeze, which must be initiated at all three bureaus, you only need to request a fraud alert once. The request will automatically be sent to the other bureaus. An initial alert lasts only 90 days, but you can request an extension for up to seven years.
If you are a victim of identity theft, or don’t expect to open any new credit accounts in the near future, a credit freeze is an effective way of preventing new account fraud. If you are not a victim of identity theft, or plan to seek new credit soon, a credit freeze may not be necessary. If you fear you could be a victim of identity theft, consider placing a fraud alert on your credit file.
Transunion: 800-888-4213 Experian: 888-397-3742 Equifax: 800-685-1111