Are you concerned about freezing your credit or even identity theft? Some consumers have chosen to make that decision for their safety because many people have fallen victim to identity theft due to data breaches. So, in this article, we will answer the question what is a credit freeze, as well as discuss the benefits and drawbacks of having one.
What is a credit freeze?
A credit freeze is an option provided to the consumer to halt all credit inquiries on their account. In a nutshell, the credit freeze restricts access to a consumer’s credit report, inhibiting any new credit from opening in the consumer’s name. Many credit companies have to pull your credit to open an account; for that reason, these companies cannot pull up your credit if you have placed a freeze on your credit.
The benefits of having a credit freeze on your account
There are some benefits of having a credit freeze on your account, which makes it quite difficult for lenders to access your credit history. Let’s take a look at some of these benefits.
- No one can open a credit line in your name unless you unfreeze it.
- Credit freezes protect you from criminals trying to open a credit account in your name.
- A credit freeze does not impact your credit score.
- It’s free to freeze your credit report.
- A consumer can place a temporary lift or permanently remove a credit freeze through any three credit agencies.
How to freeze your credit
Freezing your credit is a safe method where no one can open new accounts in your name, whether credit card or bank accounts, without your permission. Having a credit freeze would block any identity theft from occurring, and it’s one of the ways to protect your credit. You have to go onto the credit bureaus website (Experian, TransUnion, Equifax) and follow the links to freeze your credit.
You would answer some questions from each credit bureau like your name, social security information, birth date, the last couple of places you lived, etc., just to be sure it’s you trying to freeze your credit. Once the account is frozen, the credit bureau will notify you that the account is frozen, and a pin will be provided to you. Just be sure to keep this pin in a secure place.
Who should freeze their account?
Anyone can have their accounts frozen, and as was mentioned earlier, credit freezes prevent anyone from stealing your credit. It is safe to do with all the data breaches and hacks out right now from who knows who.
When should you unfreeze your account if you need to use it for something important like an emergency or job application?
When it’s time for you to unfreeze your credit, you can go back to those same credit bureaus and follow the links to do so. You can permanently take the freeze off, or you can unfreeze it for a short time, like just for a few days or maybe 60 days if you would like.
Also, the fantastic thing about freezing is that you can choose the number of days you want to unfreeze the account to make it available to a particular person or company, like getting an auto loan or going through a mortgage process, and so on. Furthermore, as soon as that unfreezing time has ended, the account will freeze back immediately.
Does freezing your credit hurt your credit score?
Freezing your credit does not hurt your credit score, and you can also visit the credit bureaus websites to view the faqs and get the information about that specific question. The credit freeze simply just locks up when you don’t need access to new credit.
The difference between a credit freeze and a credit lock
A credit freeze and a credit lock are similar in functionality, but there are still some minor differences.
- Having a credit freeze is free, but credit locks are sometimes not free. The process for having a credit lock would differ depending on the credit bureau.
- With a credit lock, there is not a full guarantee that it can be done effectively compared to a credit freeze where it can be.
- Both a credit freeze and a credit lock last forever, but sometimes credit freezes can be limited to 7 years, depending on the state where you live.
- Both the credit freeze and the credit lock block lenders, but with the credit freeze, if an insurance company or an employer has to do a background check, you have to unfreeze your credit for them to do a review.
There can also be some similarities between the credit freeze and credit lock as well. They both prevent potential lenders from accessing your credit file, and they both wouldn’t negatively impact your credit score.