What Does it Mean to Lock or Freeze Your Credit?

What Does it Mean to Lock or Freeze Your Credit?

What Does it Mean to Lock or Freeze Your Credit?
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If you’re concerned about data breaches, identity theft, or unauthorized persons accessing your credit file, you can activate a freeze or lock on your credit report. Credit locks and freezes restrict access to your reports, preventing criminals from hijacking your credit history for fraudulent purposes. Initiating a credit lock or freeze at one of the major reporting bureaus blocks all access to your credit file, subsequently preventing credit checks that are usually the first step in processing credit card or loan applications. Locking or freezing your credit is among the security options credit bureaus offer to help manage your credit and protect your identity. So, when exactly should you consider a credit lock or freeze? Let’s take a closer look. 

What is a Credit Freeze?

A credit freeze, or security freeze, is a free tool that allows you to block access to your credit report. Federal law lets you activate, temporarily lift, or permanently remove a credit freeze on your report from each of the three credit bureaus at no cost. To restrict all access to your credit report using a freeze, you must request a separate freeze from each credit bureau. Each agency will provide you with or allow you to set up a password or PIN to use when you want to lift the freeze. Since it prevents credit checks, a freeze may interfere with your ability to receive immediate credit authorizations at retail or online checkouts. Even so, a freeze will not harm your credit or affect your credit score.

What is a Credit Lock?

While a credit freeze and a credit lock impact your credit report similarly, they are different. Like a freeze, a lock restricts access to your file, but you can place it and lift it instantly through a secure website or mobile app—no need to call your credit bureau. Plus, there’s no 24-hour delay when locking your report or one-hour delay when disabling it, as with a freeze. The ability to activate and disable a lock immediately—without the time gaps inherent in the security freeze process—can make the application process easier. If you anticipate making frequent credit and loan applications, a lock may be more convenient than a freeze. However, there is a fee.

How Credit Freezes Work

A credit freeze is a measure you put in place to restrict others from viewing your credit file. Most companies or lenders can’t view your file until you “thaw” the freeze. Lenders can’t extend credit when they can’t view your credit report; so, if someone obtained on your Social Security number or other personal information, they can’t open a fraudulent account in your name. You must file a freeze request with all three credit reporting agencies for it to be effective. Each bureau may require you to answer a few questions for identity verification. You must also provide your Social Security number, proof of residence, and a copy of your photo ID. Credit freezes do not carry a fee.  By law, a credit reporting agency must activate a freeze within 24 hours of receiving a request online or via phone, and must lift the freeze within an hour of receiving your request, which must be accompanied by your password or PIN. If you lose your password or PIN, you can request a reset, but the one-hour time requirement will no longer apply.   A freeze is an effective tool in thwarting unauthorized access to your credit report, but it also blocks authorized access to your credit information. This can create problems and delays when immediate access to your report is needed. As authorized checks are also blocked, a freeze may complicate legitimate credit card or loan applications since you must unfreeze your credit file before moving forward. While a freeze is intended to prevent fraud using your identity, it is not a tool for identity theft protection. If someone steals your credit card number, they could still use your credit account for unauthorized purchases. If your Social Security number is stolen, a freeze won’t prevent the thief from filing fraudulent health insurance claims or tax returns in your name. Although a freeze can prevent most credit inquiries, certain parties may still access your frozen credit file under specific circumstances, including: 
  • You when viewing your credit report
  • Card issuers and lenders with whom you hold accounts, and who use credit checks in the account management process
  • Rental agencies and landlords screening you as a potential tenant
  • Utility companies and phone carriers when setting the security deposit on equipment
  • Debt collection agencies when trying to obtain a payment
  • Potential employers conducting background checks on your authorization
  • Auto insurance providers that include credit scores in the underwriting process
  • Child support agencies when determining support payments
  • Government agencies through a court or administrative order

When Should You Freeze Your Credit?

While freezing your credit is an extreme measure, it may be warranted if you’ve been an identity theft victim or when other options, such as fraud alerts, have been ineffective. A freeze may also be necessary in cases where you’re experiencing ongoing fraud attempts. Other instances when you should take action to protect your credit include:
  • You receive a notification that you are or might be the victim of a data breach
  • New accounts or inquiries appear on your report, indicating activity with companies or lenders you’re not aware of
  • Your credit union or bank notifies you about fraudulent activity on one of your credit accounts
  • Collection notices or unexplained bills mailed to your address in your name or another person’s name

Unfreezing Your Credit

The fastest and easiest way to unfreeze your credit is through the password or PIN code you set when activating the freeze. You may contact your credit bureau by phone or visit the credit freeze page on their website. If your freeze is active with all three reporting agencies, you must disable the freeze at each agency separately. Besides permanently unfreezing your credit, you also have the option to thaw the freeze temporarily, either by allowing one-time access to a specific creditor, or by specifying the period of time (one day, one week, etc.) you want the freeze suspended. Policies vary among bureaus, so be sure to understand your options before beginning the process. When you enter your PIN or password via phone or online, your credit will unfreeze within an hour. If you lose your PIN or password, however, the credit reporting agencies must verify your identity, which may delay the process.

Bottom Line

A credit freeze will most certainly aid in reducing your vulnerability if you suspect identity theft, but it can’t eliminate it altogether. We recommend that you keep an eye on your credit score and regularly monitor your credit report. Staying on top of your reports and scores will put you in a good position to detect potential fraud sooner, mitigating any damage to your credit history.

Experian’s free credit monitoring service can give you access to your free credit report, FICO score, and real-time alerts about any inquiries or new lines of credit on your report.

Frequently Asked Questions

Does a credit freeze affect my credit score?

A credit freeze has no effect on your credit score, and will it not impact your current credit accounts. However, a freeze will limit your ability to qualify for credit cards or new loans since a creditor’s evaluation of your credit application is blocked. In this case, you’ll need to thaw your credit prior to submitting an application to your lender. If you’re working with a temporary lift, make sure you have ample time to complete the loan application and underwriting process.

Do I need to freeze my credit with all three agencies?

Absolutely! You’ll need to activate a freeze on your reports with each of the major credit bureaus: Equifax, Experian, and TransUnion. Contact each bureau for more information on placing a freeze on your credit files.

What’s the difference between a credit freeze and a fraud alert?

Choosing between a credit freeze and fraud alert is up to you. Unlike a credit freeze that restricts access to your file indefinitely, a fraud alert is temporary. An initial alert is effective for one year, while an extended alert remains for seven years. A freeze must be lifted before most access to your credit file is granted, but fraud alerts let lenders access your reports and ask you to verify your identity before processing any credit applications made under your name. Considering the process of removing and reapplying a freeze at all agencies whenever you want to grant access to your credit score and report, a fraud alert may be a more convenient and potentially safer option. Fraud alerts remain in place as you continue to use your credit normally, and won’t require any lifting like a security freeze does. Unlike a freeze that must be reported to all three bureaus, a fraud alert made with one bureau is automatically placed at all three agencies. However, you’ll need to contact each credit bureau separately if you want to lift a fraud alert before its expiry.  

Your credit score can have a big impact on your financial future. Sign up for Experian to get your credit score and credit report for free! Join millions of other Americans and get the tools you need to help understand, manage, and master your credit—in under 3 minutes. Checking your credit score with Experian won’t hurt your score.

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