How to Freeze Your Credit and When You Should

There are times when you may want to or need to freeze your credit. Freezing your credit is an action you can take where you limit access to your credit history. The freeze can be applied to the major credit bureaus or to specific credit sources, such as a credit card. What this does is to prevent the opening of new accounts without the specific permission of the person whose name appears on the account. While laws vary from state to state, it is common that putting a credit freeze on an account does not prevent inquiries from landlords, insurance companies, or potential employers to be completed normally.

On its website, Transunion carries the same state to state qualifier, but states the opposite; that lenders and others will have access to your credit information blocked. So be sure to check your state restrictions before initiating a credit freeze. The company has a web page that lists the Credit Freeze Information by State (https://www.transunion.com/credit-freeze/credit-freeze-information-by-state).

To freeze an account all that is required is for you to contact the specific credit reporting agency (Transunion, Experian, Equifax) and tell them you want to initiate a credit freeze. You will have to take this action separately for each of the three agencies. Depending on the reason for the request, there may be a few you will have to pay. Sometimes you will have to pay to add the freeze, other times you pay to have the freeze lifted, and sometimes on both ends. If you are a victim of identity theft, virtually every state allows you to freeze your credit for free.

So why would you want to freeze your credit? The first reason that is clearly stated above is when you are the victim of identity theft. A credit freeze allows you to use your existing credit lines but prevents anyone from creating new, fraudulent accounts using your identity. If your identity is stolen, the banks that have issued you credit cards will immediately cancel them and send you replacements with a different card number and security code.

As an example, let’s say you want to execute a credit freeze due to the recent Equifax data breach. The first problem you may encounter is trying to actually reach a person by phone or access their website due to a heavy volume of requests. Once you are able to contact a credit bureau, you need to ask specifically when you can expect the freeze to be in place and active. A request does not necessarily mean it will be acted on immediately. The more specific information you have, the better off you will be. Be sure to follow up and verify your credit freeze is in place.

When deciding whether to use the credit freeze option, it is important to know that the action will not negatively impact your credit score. It is also important to know that a credit freeze will remain in place permanently except in four states: Kentucky, Nebraska, Pennsylvania and South Dakota. These states will release the freeze after a period of 7 years. If you live in one of these states (or lived in one of these states and moved after filing the freeze) you need to remember to reapply for the credit freeze if you want to extend it beyond the 7 year limit. You can also send a request to unfreeze your credit by postal mail, but if you do be sure to have proof of delivery, otherwise you risk your request being lost and untraceable.

Is identity theft the only time you should use the credit freeze option? No. You do not have to wait for your identity to be stolen if you are suspicious of irregular or unusual activity on your debt accounts. Accessing your credit card and bank accounts online gives you quick and easy access to your account information. However, realize that banks and credit card companies shut down access to their sites for regular maintenance, so 24/7 access is not always possible. It only costs a few dollars to be safe and freeze your information before you become a victim. Also, if you find an email or social media account has been hacked, the thief may be able to use that information to attempt to gain access to your financial accounts. In general, it is better to be safe than sorry.

To sum up, a credit freeze can be a financial lifesaver while at other times it can be overkill. You can use it as a preventative measure or an active measure to stop any potential fraudulent activity on your accounts. Having known someone who has been the victim of identity theft, their short, simple statement was, “It’s a big pain in the butt.” Use a credit freeze wisely and simplify your life.


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