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Legal, Regulatory, and Privacy Issues

How to set up a credit freeze

Learn how use one of the strongest levels of protection consumers have against fraud

Summary

A credit freeze strictly limits who can access your credit report, which prevents fraudsters from opening up new credit accounts in your name. Learn how to put a credit freeze in place today.

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With new scams triggered by the COVID-19 pandemic, a surge in online shopping and hundreds of millions of Americans’ identities compromised by data breaches last year, protecting yourself from cyber criminals may be more important than ever before.

One way to accomplish that is by setting up a credit freeze, which strictly limits who can access your credit report, thereby preventing anyone from opening up new credit accounts in your name.

A credit freeze is “one of the strongest levels of protection for consumers,” said Jeff Arevalo, a financial wellness expert at GreenPath, a nonprofit consumer credit counseling service.  Yet he cautioned, “a freeze is not the be-all and end-all to protect your credit.”

Rod Griffin, senior director of consumer education for the credit bureau Experian, expounded on that when he said a freeze is “really limited in its effectiveness. It’s only triggered if someone is applying for a new account. It won’t prevent existing account fraudulent charges.”

See related: I froze my credit and here’s what happened

What is a credit freeze?

A credit freeze essentially “locks down your credit” so a fraudster can’t take out new credit in your name, Arevalo said.

When you apply for a new credit card, auto loan, mortgage or another type of credit, your lender will typically pull your credit report to check your creditworthiness.

But with the freeze in place, lenders can’t access your report, so they won’t issue new credit.

For example, if fraudsters obtain your personal information in a data breach and want to use it to open up new credit accounts in your name, a credit freeze “creates a barrier in the process,” said Paige Hanson, chief of cyber safety education at NortonLifeLock.

Because these cybercriminals are looking for “low-hanging fruit,” they are likely to give up on trying to use your identity to open fraudulent accounts, Hanson said.

Setting up a credit freeze

You’ll need to contact each of the three main credit bureaus – Experian, Equifax and TransUnion – to set up a credit freeze. Here’s where to go:

You’ll get a PIN from each credit bureau, which you can use to unfreeze and refreeze your account, Arevalo said.

In 2018, following the Equifax data breach that exposed the personal information of 147 million people, Congress passed a law allowing anyone to obtain a credit freeze, Hanson said.

Previously, you had to be the victim of identity theft to freeze your credit.

Before the law passed, some states required consumers to pay a fee to set up a credit freeze. Now there is no charge for the service, Hanson said.

When you place a freeze on your account, you’ll have to provide your name, date of birth, Social Security number and other information that the bureaus can use to verify your identity, Hanson said.

Even with a credit freeze in place, you can check your own credit report. In addition, your existing creditors or debt collectors can access your report, according to the Federal Trade Commission (FTC).

Unfreezing your credit

If you want to apply for credit, you’ll have to unfreeze your credit reports, which means remembering different PINs, Arevalo said. “It can be a little bit of a hassle,” he warned.

You can unfreeze credit for a day or two or even lift the freeze indefinitely.

If you make the request to unfreeze your report online or by phone, the law requires that the credit bureau unfreeze it within one hour, Hanson said.

If you make the request by mail, the credit bureau needs to lift the freeze within three business days of receiving your request, according to the FTC.

While the freeze offers protection, it can be a drawback if you are shopping and a retailer offers you a discount if you open a credit card on the spot, Hanson said.

See related: Credit report sample – how to read, understand a credit report

Who should consider a credit freeze?

Experts are divided on who should consider freezing their credit.

“In general, it’s good protection to have your credit frozen,” said Lewis Bertolucci, vice president of protection products for Allstate Identity Protection.

Having to unfreeze your credit is a “minor inconvenience that avoids the hassle downstream” if someone opens up fraudulent credit accounts in your name, Bertolucci added.

If you become the victim, resolving the situation “becomes extremely complicated on the consumer side,” said Bertolucci, who has been a victim of identity theft himself.

Griffin said a credit freeze can be effective if you’re not often in the market for new credit for example, it might be good for a senior who seldom uses credit.

But for a young family who might be interested in applying for new credit cards, a car loan or even a mortgage, “it may be more of a hindrance than a protection for you,” Griffin said.

Michael Foguth, a retirement planner and founder of Foguth Financial Group, said he keeps his credit frozen to provide himself with a layer of protection.

If Foguth needs new credit, such as applying for a mortgage, he’ll ask the credit bureaus to lift the freeze temporarily and then tell the lenders they have 48 hours to pull his credit. “It makes them do the job a little bit quicker,” he said.

If fraudsters get hold of your children’s Social Security number and other personal information, they may use it to open up credit accounts.

You also might consider putting a freeze alert on your children’s credit to provide protection, Hanson said.

Because children don’t typically have credit reports, a report is created and then frozen. To place a freeze, you’ll need proof of their identity and proof that you are their parent or legal guardian, Hanson explained. 

Establishing a fraud alert

You also might consider setting up a fraud alert, Hanson said. With the fraud alert, you can open up new credit without worrying about unfreezing anything.

Creditors can access your credit report but have to take extra steps to verify your identity.

You just have to ask one of the three credit bureaus to set up a fraud alert, and they have to notify the other two credit bureaus to do the same, according to the FTC.

The alerts last for one year and there is no charge for placing one on your credit report.

See related: Fraud alerts – what they are and how they work

Remain vigilant

Even if you set up a fraud alert or a credit freeze, “it doesn’t mean you should be less diligent and relax and share information,” Griffin cautioned.

Fraudsters may send you phishing emails trying to obtain your personal information, or they may even turn to dumpster diving to fish papers containing your personal information out of the trash, he said.

To protect yourself from fraud, Griffin recommended checking your credit report regularly.

Because of the COVID-19 pandemic, you can check your credit reports at no charge once a week through April.

Typically you can get one free copy of your credit report every 12 months from each of the credit bureaus at AnnualCreditReport.com.

Whatever you do, just “don’t relax and assume everything is fine,” Arevalo said.

See related: How to report and protect yourself from credit card fraud

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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