Freezing your credit reports means that you proactively put a “freeze” on your reports so that no one can access them.
Why Freeze Your Credit Reports?
According to Consumer Reports, “If you’ve been a victim of identity theft or want to prevent yourself from becoming one, you might be considering putting a security freeze on your credit file. While a freeze is in place, it greatly reduces the chance that anyone will be able to open credit in your name.”
Freezing your credit reports means that it’s near impossible for someone to open credit in your name. Freezing your credit reports add a layer of protection to your identity and credit. That said, it makes it near impossible for anyone (even those who you authorize) to access your credit reports.
The Effect of Freezing Your Credit Reports
Effectively, no one can access your credit if you freeze your credit reports (except maybe the government). This means that even if you authorize someone to access your credit they will not be able to. Freezing your credit reports means that you can apply for new accounts, but the lender will not be able to access your credit to approve you.
Freezing your credit means that:
- A credit card company cannot check your credit if you are signing up for a credit card.
- A cable company cannot check your credit if you are signing up for cable.
- A loan officer cannot check your credit if you are planning to take out a loan.
- An employer cannot check your credit for a background check.
- A leasing agent cannot check your credit if you are planning to rent an apartment.
- An insurance agent cannot check your credit if you are trying to buy insurance.
- A mortgage banker cannot check your credit if you want to refinance your mortgage.
Freezing your credit reports does not have an effect on your credit score.
How To Freeze (and Unfreeze) Your Credit Reports
If you want to freeze your credit reports, you can do so online. You have to go through each of the three credit bureaus – Experian, TransUnion, and Equifax. You should be able to do the entire process online. If you have any difficulties, you can call and speak with a representative or you can mail in your request with the proper documentation. Almost all states require a small fee to free your reports – usually $2-$12 (if you have been a victim of identity theft, it may be free).
After you freeze your reports, do not lose your pin! Each agency will give you a pin number and having that pin is crucial in being able to life the freeze later on.
If you decide that you want to unfreeze your reports, you can do so temporarily (for a number of days) or permanently. You can unfreeze your reports by going to each of the credit bureaus’ websites and paying the applicable charge ($5 or $10). Again, if for some reason the online process doesn’t work for you, you can call and get your reports unfrozen during business hours by speaking to a representative (or you may mail in your materials but that process takes longer). A couple states, including Kentucky, Nebraska, and Pennsylvania automatically remove your freeze after 7 years. For most states, you remove it yourself.
Who Should Freeze Their Credit Reports
You should consider freezing your credit reports if you have had your identity stolen or you think it might be stolen in the future. Additionally, if your credit information is at risk for any other reason that you want additional protection for, you should freeze your credit reports.
Dave Ramsey freezes his credit reports (at least that’s what he’s said on his show), and it might be something you want to consider if you only use a debit card because more people have access to your bank account information.
Credit Freeze vs. Fraud Alert
An alternative to freezing your credit reports is placing a fraud alert on them. You can place a fraud alert on each of your credit reports, making them accessible (unlike a freeze) but only after extra steps are taken to prove your identity. To do so, you only need to notify one of the three bureaus. The one you notify will notify the other bureaus of the fraud alert on your credit (unlike a credit freeze that requires you notify all three bureaus yourself). While a credit freeze is a long-term freeze on your reports, a fraud alert only lasts 90 days. If you have been a victim of identity theft, you can request an extended fraud alert that lasts for seven years.
My Credit-Freezing Mistake
I had all three of my credit reports frozen up until last week. I don’t use a credit card (I’ve never had one), so freezing my reports is an extra form of identity protection (since I always use my debit card). After my debit card was part of the Target security breach (where my debit card info was stolen) I put a freeze on my reports in January 2014 for piece of mind. I also never take out loans or use my credit so I knew I didn’t need to access my credit in the near future. By having my reports frozen, I was adding a layer of protection to my credit in case anyone tried to steal my identity or take out a line of credit in my name.
Fast-forward one year to January 2015 when I received a job offer at a new firm. I was so excited and turned in all of my application materials. One week later, I realized that my employer would not be able to access my credit reports because of the freeze. I completely forgot that employer’s check your credit (usually not for your credit score but to see any bankruptcies or foreclosures). Also, the job was in a different city, which meant getting a new apartment only if my credit was approved. OH MAN! I panicked. I called and had the freezes at each of the agencies lifted, which took about one hour to do. But I realized this over a holiday so I had to wait until the offices were open. Thankfully, I did this before the employer looked at any of the paperwork, but it was still very last minute – and I was frantic.
The takeaway: Employers look at your credit, too, so if you are applying for a new job, make sure you unfreeze your credit reports.
The best thing you can do is plan ahead. If you know you are going to be applying for a new job or applying for credit, unfreeze your reports temporarily or permanently.
photo by freedigitalphotos.net via sixninepixels