What Is a Credit Freeze? 5 Things to Know

What we’ll cover:

• A credit freeze may be an option for individuals who are worried about identity theft or have been impacted by a data breach
• A credit freeze restricts access to your credit reports – it is different from setting up a fraud alert or a credit lock
• You can freeze your credit for free though the major national credit bureaus (Equifax, Experian and TransUnion)
• You can temporarily or permanently remove a credit freeze when you need to
• A credit freeze does not impact your credit score
• A credit freeze can help reduce the chances of identity theft but it doesn’t prevent it

Ever had to cover up your paper while taking a test to keep others from copying off of you? (Hey, we knew you were the smart one in school.) 

That’s kind of the basic idea behind a credit freeze. Freezing your credit keeps other people (like lenders, identity thieves, etc.) from looking at or accessing your credit reports.

A credit freeze, also known as a security freeze, is a common option for those who are worried about identity theft or have been impacted by a data breach. By limiting access to your credit reports, you can make it harder for identity thieves from opening new accounts under your name. That’s because to open a new account or extend credit, lenders typically would need to review your credit history before approving anything. And if your credit reports are frozen, many companies won’t open a new account for you. (Don’t worry, you can always unfreeze your credit – we’ll get into that later.)

If you’re thinking about freezing your credit, here are five key things to know before you put in the request. 

1. A credit freeze is different from a fraud alert and a credit lock

A credit freeze blocks access to your credits reports, preventing both lenders and would-be identity thieves from looking at your credit history. 

It’s important not to confuse a credit freeze with other anti-fraud tools, such as a fraud alert and a credit lock. 

Setting up a fraud alert doesn’t restrict access to your credit reports. It simply tells lenders that they need to take some extra steps to verify your identity before approving or opening a new account in your name.

Fraud alerts may be an option for someone who thinks their identity might’ve been stolen but hasn’t been able to confirm for sure. For example, if your information has been compromised in a data breach and you’re not sure if someone has actually stolen your identity, a fraud alert might make sense as a first step. Visit the Federal Trade Commission (FTC) to learn more about fraud alerts. 

Now what is the difference between a credit freeze and credit lock? 

Because both of these can prevent people from accessing your credit reports, it can be easy to mix up these two terms. But they’re not the same thing. 

A credit lock is a service (which you usually have to pay for) that allows you to lock and unlock access to your credit reports almost instantly (through an app) – without having to officially freeze and unfreeze your credit.

In other words, a credit lock can provide a more convenient way to manage access to your credit reports. 

That said, convenience doesn’t necessarily mean better protection. Keep in mind that credit lock services vary from provider to provider. Some may offer more features than others. 

Credit freezes, on the other hand, are regulated by law. Because of this, generally speaking, a credit freeze may provide more legal protections than a credit lock. If you’re thinking about doing a credit lock, do some research before signing up to see if this service makes sense for you.

2. You can freeze your credit for free (really, it’s free)

For whatever reason, whether or not you’ve been a victim of identity theft, if you want to freeze your credit, you can do it through the three nationwide credit bureaus: Equifax, Experian and TransUnion. 

And guess what? It’s free. (Thanks to the Economic Growth, Regulatory Relief, and Consumer Protection Act, which took effect in September 2018.)

You’ll want to contact each of the credit bureaus directly to put in a request. Generally, you’ll need to answer a few questions about yourself and provide some documentations to verify your identity. This may include your Social Security number, date of birth, photo ID and proof of residency. 

Once your request is approved, each of the three bureaus will give you (or ask you to create) a unique PIN. 

This is important: Keep your passcodes in a safe place (not on a sticky note in your desk drawer). That’s because you’ll need to provide your PIN if you want to unfreeze your credit reports down the road. The PIN lets the credit bureau know that you are the person who you say you are when making a request. If you lose your PIN, the credit bureau will have to verify your identity via another method, which can cause delays.

3. You can remove a credit freeze – temporarily or permanently

Once you put a freeze on your credit, it stays in place until you ask the bureaus to remove it. So, if someone needs to run a credit check on you (say you’re trying to apply for an apartment lease or a loan), you’ll have to remember to lift the freeze so that lenders can access your credit reports. Otherwise, you may run into delays during the credit check. 

You can put in a request to unfreeze your credit by visiting the three national credit bureaus online (or by phone if you’re old-school like that).

According to the FTC, once you put in a request, a credit bureau has to unfreeze your credit within one hour. (If the request is made by mail, they have three business days to do it after receiving.)

You can choose to lift (or “thaw”) the freeze either temporarily or permanently. 

For instance, let’s say you want to apply for a loan and your lender needs to run a credit check – but you don’t want to permanently remove your freeze. You can ask the credit bureaus for a temporary lift. And you can usually specify how long you want the freeze to be lifted. 

You could also ask the lender which credit bureau they’re using to run the check. That way, you can lift the freeze at that particular bureau without having to unfreeze your reports at the other two bureaus. Could be a real time saver!

If you decide to permanently unfreeze your credit, you can make the request and then you can always go back to freeze it again if you ever need to.

4. A credit freeze does NOT affect your credit score

Freezing your credit won’t impact your credit score in any way. (Phew!) It also won’t keep you from getting your free annual credit reports from the credit bureaus either. 

But as we mentioned earlier, because a credit freeze makes it harder for lenders to see your credit reports, it can cause delays if you’re trying to open a new account without lifting the freeze first. 

Good to know: A credit freeze doesn’t block everyone from seeing your credit reports. Certain existing creditors, debt collectors as well as government agencies may still be able to access them under certain circumstances.

5. A credit freeze won’t protect you from everything

Now, while a credit freeze can block access to your credit reports and help keep the bad guys from opening up new accounts under your name, it doesn’t prevent identity theft.

If a thief has your credit card numbers already, they can still treat themselves to some nice unauthorized purchases. Or if they have your Social Security number, they can still pretend to be you and make fraudulent claims in your name. 

So even though a credit freeze can help reduce the chances of credit fraud, you still have to be vigilant about monitoring your existing accounts for any suspicious activities. 

We have a few tips in our cybersecurity article that you might be interested in. Take a look and see what steps you could take to help you stay protected.