Freezing Your Credit Files

credit freeze

We’ve covered the massive Equifax security breach that affected roughly 150 million Americans, and offered a lot of advice to help listeners protect themselves.  One suggestion was to freeze your credit, a suggestion also made by the Federal Trade Commission.

So What Is a Credit Security Freeze?

Simply put, if you implement a credit security freeze, you essentially lock down all your personal information.  While this is no guarantee your information cannot be compromised, it greatly reduces the chances and virtually eliminates the possibility of someone using your information to apply for credit.

Once you notify Experian, TransUnion, and Equifax you want to freeze your credit file, they will issue you a personal identification number (PIN).  If you are going to apply for credit anywhere, you will need to contact the agencies and let them know you want to unfreeze your credit history.  There will be no affect on your existing creditors, just new lines of credit.  Note: There is a charge for freezing your report, usually from a low of $3 to as much as $15 per event.  Equifax is not charging for this service through November 21, 2017.  There is also a charge to unfreeze, which is slightly less.

Advance Planning

Freezing your credit, while adding a layer of safety, can also cause you issues if you are going to make a purchase or apply for credit.  We heard from a Sacramento listener recently, who purchased a new car, but forgot to unfreeze their credit, and didn’t have their PIN with them.  It delayed the purchase by several hours.  Since most people don’t apply for credit very often, it’s easy to forget to do this.  Unfreezing can be done by phone, mail, or online.  The online method is by far the fastest and easiest.

When you unfreeze your account, you can specify a specific creditor that you’ve applied to, but in the case of car shopping, you can open your files up for a specific time period to allow for shopping multiple dealerships, or shopping to get your best interest rate.

If you think you may be freezing and thawing your credit reports, there is also an annual plan that may be cheaper than the pay-as-you-go option.  Note:  A credit freeze has no effect on your credit score, either good or bad.

Other Things You Should Know

  • Freezing your credit will not keep you from accessing your free annual credit report.
  • Freezing will not stop a thief from making charges on accounts that already exist, but it will keep him or her from opening new accounts.
  • Freezing will not stop the annoying pre-screened credit offers we all get in the mail, phone or email.  There is a way to stop it, however.  You can do it online here: https://www.optoutprescreen.com/?rf=t or call 800 5OPTOUT.
  • If you freeze your credit files, remember to unfreeze them if you are applying for a job, shopping for any kind of insurance, or renting something, like a home or apartment.
  • A fraud alert is different than a credit freeze.  If a fraud alert is issued on your account, your credit files are accessible to any creditor, but they are required to verify the information is really requested by you.  If you have a fraud alert, you still need to monitor all your accounts, credit history, etc.  There is no charge for a fraud alert being placed.
  • The big three credit reporting agencies are required to communicate with each other.  In other words, if you notify Equifax you want to freeze your files or have a fraud alert placed, they are required to notify Experian and TransUnion.  However, I would not trust that to happen, especially in light of the Equifax mess.  Whichever one you contact, verify with the other two, or to be safe, notify all three.
  • Some credit freezes last for seven years, depending on where you live.  In most cases, the freeze stays in place indefinitely unless you contact the agencies and ask it be lifted.
  • The phone numbers for the big three reporting agencies are:

In Conclusion

Freezing your credit is a personal decision, and while it helps protect you, it can also be a hassle, especially if you are shopping for a car or some other line of credit.  Dealerships are adapting quickly by reminding people before they visit to unlock their credit files, or at very least, bring your PIN so you can do it there.

It goes without saying that if you do choose to freeze your accounts, put the PIN in a very safe place.

 

Photo Credit: robertindiana/Shutterstock.com

 

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