What Is a Credit Freeze?

What Is a Credit Freeze?

June 3, 2013         Written By Sarah Hefner

A credit freeze is a hold put on a person’s credit that prevents banks from pulling their credit reports. This is viewed as the ultimate form of credit protection, and it ensures that no one will see your credit for fraudulent purposes. Nevertheless, it is not always a good financial strategy.

What is a credit freeze? How does it work? Should you use one? Find out the answers to those questions and more in the information below.

What Is a Credit Freeze?

A credit freeze is literally a freeze on your credit. It is a hold placed with Experian, Equifax and TransUnion that prevents anyone from looking at your credit–period. If you or someone else tries to put in an application for a loan, credit card or other line of credit, it will be declined because the lender or creditor cannot access your report for evaluation. Your credit history becomes bullet proof.

How Does a Credit Freeze Work?

If you want to get a credit freeze on your account, you will need to pay a small fee to each of the major credit bureaus. You can do this online or through the mail. The fee you pay will vary by state, so you will need to check with your state’s fees and requirements to learn more. In most cases, it will be about $20 per credit bureau, but some states charge much less than that. Once you have the payment and request in place, the credit bureaus will begin working to freeze your accounts.

Can You Remove a Credit Freeze?

You can ask for a temporary lift of your credit freeze, or you can have it permanently removed. The temporary lift will give you a chance to submit a few applications without exposing your account. It can take three or more business days to temporarily lift a freeze, so you need to factor that in to your timing. Make sure your applications come in after the freeze is removed. Completely eliminating a credit freeze takes a little more time, but it is possible. It costs more money, but it will once again open your reports to applications. If you decide that you want to enact another freeze in the future, that is easy to do.

Who Should Use a Credit Freeze?

Anyone can enact a credit freeze at any time, but it is not ideal for most people. This setup is mostly designed for elderly individuals who no longer need to apply for car loans, house loans and other major purchases that would require some level of credit. If you plan to apply for any line of credit in the near future, a credit freeze is probably not a good solution. It will only complicate your applications and create a stressful environment for you.

If you have been the victim of identity theft, a credit freeze might protect your account until an investigation is complete. Once you know that the thieves have been caught and stopped, you may consider removing the freeze. In situations like this, it may be possible to obtain a security freeze for free. You will just need to prove that you have, in fact, been the victim of identity theft.

Other Alternatives to a Credit Freeze

Perhaps a credit freeze is too extreme of an action for what you need. There are other ways to protect your credit from fraudulent use. Here are a few preventative measures you can take to ensure your credit reports are safe:

  • Sign up for an identity theft protection program. There are many of these available online, and they monitor your credit reports for you. Any time something happens to your credit, you will receive an alert via email or text message. You can check your report and see if something is not right.
  • Be careful with your personal information. Make sure you can trust everyone you gave your social security number to, especially if you are applying for a loan. Verify the security of any websites you go to, and only apply with those you trust.
  • Watch your credit card accounts closely. If you see any unauthorized charges on your accounts, immediately report them to your issuer so they can be removed.
  • Look over your credit report at least once a year. You can do this for free, and all you have to do is sift through the information. If you see something strange, contact the company associated with it and ask about the situation. If it turns out to be an application falsely filed in your name, you can take legal steps to have the matter resolved.

Now that you know what a credit freeze is, think about whether or not it is right for you. If it is, you can contact the credit bureaus and start your freeze. Otherwise, follow these tips to protect your credit as much as possible.



The information contained within this article was accurate as of June 3, 2013. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


sarah

About Sarah Hefner

Sarah Hefner has written for several publications as well as serving as an editor to various writers. She graduated from the School of Communications & Journalism at Auburn University with a Bachelor of Arts degree in Public Relations.
View all posts by Sarah Hefner
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