After big data breaches like Equifax (NYSE: EFX), you might have heard the term “credit freeze” thrown around. A credit freeze allows you to take control of your financial credit report by stopping potential lenders from seeing it. Without that information, lenders will usually not allow you or anyone claiming to be you to open a line of credit. But is it ever a good idea to freeze your credit?
Here are the pros and cons and how to freeze your credit.
The Pros Of Freezing Your Credit
In September 2018, the option to freeze your credit for free became available to all consumers. Whenever you want to lift the freeze, both temporarily or permanently, it also won’t cost you a dime to do so.
It Can Protect You Against Thieves
Putting a credit freeze on your accounts can stop you from potential identity thieves. It can give you a sense of security knowing that no one can open an account in your name, and your credit report is secure. In most states, the freeze will last indefinitely, so you also don’t have to worry about it expiring and leaving you unprotected.
The Cons Of Freezing Your Credit
Not Always Necessary
If your credit card has been stolen, or a thief opened one account in your name, you can likely take care of the problem without a credit freeze. Contact your bank and credit bureaus to have the fraudulent accounts removed from your report.
Not 100% Effective
While a credit freeze does stop someone from opening an account in your name, it doesn’t stop all types of thefts. If the information about an existing account is compromised, then your credit can be used without your permission.
Need To Plan Ahead
Anytime you want to open a new line of credit, like a mortgage, auto loan, or credit card, you will have to plan ahead. You will have to contact each credit reporting agency to lift the credit freeze, which can be time-consuming and a hassle.
How To Freeze Your Credit
If you decide freezing your credit is right for you, you must contact each of the three major credit bureaus to freeze your credit. Each bureau has a slightly different process and must be contacted separately.
Once the freeze is in place, you will need to lift it temporarily whenever you want to apply for new credit. To unfreeze your credit, either call or go online to the credit bureau’s website. The process will take roughly 20 minutes. Even though you are safer from identity theft, it is important to continue to monitor your account for any signs of fraudulent activity.
- Equifax: Call 800-685-1111 or go online.
- Experian: Call 888‑397‑3742 or go online.
- TransUnion: Call 888-909-8872 or go online.
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