June 17, 2024


Live Finance

How to freeze your credit and when it makes sense to do so

Your credit report plays a major role in helping you hit all of your financial goals. Lenders rely on it to give them insight about your financial history and determine whether they want to approve you for new loans, credit cards, and more. This is why it’s important to protect your credit and the information in your report. 

One of the ways you might do that: a credit freeze. 

What is a credit freeze?

A credit freeze or security freeze is a restriction you can put on your credit file that prevents anyone from accessing your credit report, which, in turn, prevents you or anyone else from opening new accounts in your name. A 2022 survey from LendingClub found that just 17% of consumers have a fraud alert and/or a credit freeze on their credit reports. In all, 10% have a credit freeze, 9% have a fraud alert, and 2% have both.

You can temporarily lift the credit freeze if you need to apply for new credit, although there are still many things you can do while your credit is frozen. Freezing your credit won’t limit your ability to do things like apply for a job, rent an apartment, use your existing credit cards, access your credit score, or buy insurance. And it doesn’t affect your credit score in any way.

When should you freeze your credit?

You don’t always have to have a reason for freezing your credit; it’s up to you to determine when you want to limit access to your credit file. However, there are instances when a freeze can help provide you with an added layer of protection. 

“It makes sense to do so if you want to protect your credit from being accessed or if you are afraid of fraudulent activity. It can also be a way to help the elderly who are at higher risk of being taken advantage of,” says Dawn Dahlby, certified financial planner, CRPC® and founder of Be WELLthy, a wealth management company. 

You might consider freezing your credit if you notice any of the following: 

  • New credit accounts or inquiries that do not belong to you 
  • Unexplained bills or collection notices
  • Unauthorized transactions from your checking or savings accounts
  • You’ve been notified that your personal information has been compromised in a data breach

How to freeze your credit 

Freezing your credit is completely free and must be done separately through each of the three major credit bureaus—Equifax, Experian, and Transunion. All three bureaus allow you to place a freeze on your credit file online, over the phone, or by mail. 

You’ll need to provide certain pieces of personal identifying information (PII) such as your Social Security number (SSN), a copy of a photo ID and proof of residence, such as a recent utility bill. When you freeze your credit online or via telephone, the freeze will likely be placed instantly. Placing a freeze by written mail can take a few business days to process. 

Once it’s all said and done, your credit freeze will remain in place until you contact all three credit bureaus and request that it be removed. 

The takeaway 

Freezing your credit can give you extra protection if you’re not currently using your credit or don’t plan to apply for new credit any time soon. Keep a close eye on your credit report and financial accounts, and consider placing a freeze and filing a dispute if you think your information or credit file may have been compromised.