Should I Freeze My Credit?

how to freeze your credit

Security freezes, also known as credit freezes, are nothing new. But they’ve been getting a lot of coverage since the September 2017 Equifax data breach announcement. The massive breach, which impacted an estimated 145.5 million consumers, has many people scrambling to find ways to protect themselves and their credit reports from identity theft. If you’re one of them, a security freeze might be right for you.

When you freeze your credit reports properly, you are taking them out of circulation. This makes it virtually impossible for a scammer to open new, fraudulent accounts in your name.

Why You Need to Pay Attention

Why is the Equifax data breach so scary? Names, addresses, dates of birth and Social Security numbers were exposed. Thieves may use this personal information to apply for fraudulent accounts in your name. This process is commonly referred to as identity theft and, among other serious issues, can have a horrible impact on your credit scores. Because your credit plays such an important financial role in your life, the importance of paying attention to your credit and protecting it is crucial.

What Is a Security Freeze?

The most effective tool you can use to protect yourself from identity theft is a security freeze. When you freeze your credit reports properly, you are taking them out of circulation. This makes it virtually impossible for a scammer to open new, fraudulent accounts in your name.

Security freezes prevent lenders (those with whom you do not already have an existing relationship) from accessing your credit reports without your permission. Even if a thief applies for a fraudulent mortgage, for example, using your name, Social Security number and other accurate personal information, the lender will not be able to pull your credit report(s). As a result, any fraudulent applications will be denied and the would-be-thief would be forced to move on to another unfortunate victim.

Requesting a Security Freeze

To make this credit protection tool truly effective, you should place a security freeze at each of the three credit bureaus. If you only freeze one or two of your credit reports, you are still going to be vulnerable.

Additionally, while security freezes are inexpensive, they are typically not free unless you can prove that you have already been a victim of identity theft. Each credit bureau usually charges a fee, which varies depending upon the state in which you live. When you freeze one of your credit reports, you will be assigned a PIN, which can later be used to thaw your report when you want to apply for credit legitimately. This minor inconvenience is arguably the only downside to security freezes.

The easiest way to place a credit freeze is to visit each bureau’s website.

What If I’m Ready to Buy a House?

If you’re ready to buy a house and need a mortgage to do so, great. Before you get pre-qualified or formally apply for a mortgage loan, you’ll need to thaw all three of your credit reports, thus putting them back into circulation. When you apply for a mortgage, the lender is going to pull all three of your credit reports, so you can’t get away with thawing only one or two of them. After your reports have been accessed, you can re-freeze them until you want to apply for credit again.