Freezing Credit Reports

In the past few years, many people have become aware of the ability to freeze credit reports, due to the 2015 Experian/T-Mobile data breach and the much larger 2017 Equifax breach, where the data of more than 140 million people was exposed. Talk of freezing credit reports was very much in the news at that time, so let’s discuss exactly why you’d want to freeze your credit report, how to do it, what it costs, and the implications of doing so.

Simply put, a freeze prohibits most entities from being able to check your credit report. Because this is needed to establish most new accounts (credit, loan, utilities, phone, etc.), it’s often the first line of defense for those who are victims of identity theft. It can also bring peace of mind to those who want to be more protective of their credit. Once your credit report is frozen, you can similarly unfreeze it to allow access to it again.

A freeze doesn’t prohibit companies that you do business with from looking at your credit report. A company looking at your credit report in this way isn’t a hard pull, so it doesn’t affect your credit score. Updates that are reported, such as balance, payment history, etc., continue as normal. It’s also possible for items to be added to your report, for example a new delinquent account that’s been reported by a debt collector.

If you plan to use a service such as Credit Karma to keep track of your credit report, you may not be able to sign up for an account, but accounts active prior to the freeze will still work as normal. Additionally, freezing your credit doesn’t affect any of your current accounts and your credit cards still work as normal.

Why would you want to freeze your credit? The number-one reason for doing this is identity theft. Identity theft isn’t simply noticing unauthorized charges on your credit card — this actually happens on a regular basis and you can simply contact the creditor to dispute the charge, after which they’ll change your card number and send you a new card.

Identity theft also involves someone (unfortunately, often a family member or other close relation) having a lot of personal information about you, including your Social Security number, and using it to establish new accounts. Aside from contacting the police when this happens, you should definitely freeze your credit. This will stop new accounts from being set up, while you work to clean up the unauthorized ones.

If you want or need to freeze your credit report, there are several things you should know before doing so. Generally, if you want to initiate a freeze with one credit-reporting agency, you’ll want to freeze it at all credit reporting agencies, so keep in mind that you have to individually notify each credit-reporting agency by phone, mail, or online. The entire process can usually be done online, via equifax.com, experian.com, and/or transunion.com.

You might need to pay a fee, which varies from state to state. In Nevada and California, the cost is $10 per credit report for freezing, temporarily unfreezing, and unfreezing, while in Alaska it’s only $5 to freeze, $2 to temporarily unfreeze, and free to unfreeze. Certain classes of people can get these fees discounted. Identity-theft victims, for example, can provide documentation such as police reports and usually have the fee waived. In some states minors, seniors, or active military might also get the fees waived. For example, in California, the fees are halved for seniors and free for those under 16, while in Nevada, there’s no fee for seniors, but minors are given no special consideration.

You may have been contacted in the past, usually due to a security breach, notifying you of the breach, as well as offering a free or discounted credit freeze. This is another potential way to save money on the fees associated with freezing credit.

When you do a freeze, you’re usually given some private information, such as a PIN, that can be used to stop the freeze, also called unfreezing or thawing. If you lose this PIN, it can be recovered, usually for a fee similar to that of the initial freeze.

Once you’ve frozen your credit reports and assuming you still have the necessary information to unfreeze your report, what do you do now? As soon as you’re confident that the threat has stopped, you can unfreeze your report. From this point, if you wish to refreeze your credit report, you must begin the process over and usually pay a fee. Be sure to check the specifics of the credit-reporting agency and your state, because some states have laws that freezes don’t expire until the person unfreezes it, while others may automatically remove the freeze after a few years.

What if you believe the threat still exists, but you need to give access to your credit report to a creditor so you can apply for a credit card? You can unfreeze it for a specific period of time (that you may be able to specify), after which it becomes frozen again. Like everything else, this usually costs, although I have a big tip to save some money.

Suppose you’ve frozen all your credit reports, then want to temporarily unfreeze so you can apply for a credit card — this might cost $30 in fees! However, if you ask the credit-card company what credit-reporting agencies they use, you simply unfreeze those credit reports. Most creditors typically pull a credit report from one or two agencies, because they have to pay a fee to access those credit reports too!

Hopefully, this gives you some insight into the world of freezing credit reports. The vast majority of people won’t ever have to worry about freezing their credit reports. However, for those who want or need more protection, the freeze is there and, although it costs money, it’s easy to do.

EDIT: As of September 21, 2018 credit freezes are free by federal law.  This article was written before that date.  The article above still contains valid information about what a freeze is, why you would want to do it, and how to do it.  The only difference is that you don’t have to worry about fees!