At the risk of sounding like a mom waving her finger telling you to put on a jacket, I implore you to freeze your credit. We’ve all heard the advice. It gets reiterated with the weekly news of yet another data breach. So why is it, so few have actually done it?
At first, I thought it was the typical busyness that keeps us from getting to the important but not yet urgent chores. That was, until I asked better questions. In recent conversations with clients and friends, what they shared wasn’t about being busy. It was about concern it was difficult to do and confusion over what freezing your credit does and doesn’t do. Since I already have on my mom hat, let’s clear this up.
Freezing your credit is like locking your door. It limits access others have to the things you value. Locking your doors is a simple way to reduce the risk of someone getting at your things.
The same is true for freezing your credit. It reduces your risk by adding a layer of protection. It has been widely recommended for years as one of the best guards against identity theft. The term “freeze” is part of the confusion. It suggests your credit becomes unusable, causing concern it can no longer be used or changed. Neither are true.
Add to the unfortunate terminology, there is the general fear many of us have around our credit and credit score. We tell ourselves we’ll do it once we get our score up, or our debt down.
Is there a slight hassle factor to freezing your credit? Yep. It takes a few minutes to set up and requires another password or PIN for each of the three credit bureaus. A young professional recently told me, “I was surprised with how easy it was to unfreeze and refreeze.” Sometimes the hardest part is navigating around prompts promoting other “credit protection” services or fraud alerts. By law, freezing your credit is FREE. That doesn’t mean they have to make it obvious or limit what they promote. You will want to read the options to make sure you are selecting the option to freeze your credit report.
What Freezing Your Credit Does:
It keeps the bad guys out. It stops creditors looking to open an account in your name, from accessing your credit report without your involvement. Which in turn stops them from issuing credit in your name. It can stop thieves from being able to open a credit card, take out a loan, or open other lines of credit in your name.
What Freezing Credit Does NOT Do:
It does NOT impact your current credit accounts. It has no impact on your existing loans, credit cards, or other credit lines you already have. It only applies to new attempts to open accounts.
Yes, that means it will limit your ability to say yes to the retail clerk who asks if you’d like to apply for the new Super Fantastic Saver Card and get 10% off your purchase today. But is that really a disadvantage?
It does NOT impact your credit SCORE. Banks, credit card companies and other creditors who you have a relationship with, will continue to report your payment history to the three credit bureaus. Your credit score will continue to reflect your payment history, credit mix and other factors. Based on the algorithms, your credit score will continue to adjust.
It does NOT stop you from getting additional credit. Like unlocking your door so your friend can come in, you will have to unlock your credit report. If you know when your friend is coming and which door (credit bureau) they will be using, you can open that door for the time period when you expect your friend (or creditor).
To make this easy for you and efficient for them, credit bureaus allow you to schedule a thaw. When you know you’ll be shopping for credit, simply schedule an unfreeze/refreeze, which temporarily unfreezes and refreezes your credit report based on your needs. My husband recently opened a new credit card. In the process, he found out when they would check his credit report and which credit bureau they would be using. He then unfroze his credit report with that specific bureau. In the process, he was given an option to automatically refreeze his report within a specified period of time. The card company checked his credit report the next day. The following day, his credit was automatically refrozen.
It does NOT stop background checks. Organizations you want to work for, rent from, or volunteer with will still be able to perform a background check that includes credit.
How to Freeze Your Credit
You can place a freeze online or over the phone. Most find it easiest online. Properly freezing your credit requires contacting all three nationwide credit bureaus: Equifax, Experian and TransUnion. Below are links and numbers for each.
Equifax
800-685-1111
Experian
888-EXPERIAN (888-397-3742)
TransUnion
888-909-8872
You'll need to supply your name, address, date of birth, Social Security number and other personal information. You will likely need to establish a PIN or password so you’ll want to have a plan for how you will keep track of it.
Bottom Line – Don’t let misconceptions or the new password factor keep you from the peace of mind of knowing you locked the door to your credit.
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