What’s a Credit Freeze?

A credit freeze is used to prevent potential lenders or other businesses from reviewing you credit reports and credit scores without your consent.  This prevents identity thieves from opening credit accounts in your name, even if they have your social security number and/or other personal information.  They are a proactive solution for identity theft, rather than reactive.  A credit freeze essentially takes your credit reports out of circulation and prevents unauthorized access.Who can still review your credit reports while they’re frozen?

Credit freezing does not prevent the following companies from accessing your credit report:

• Current creditors such as credit card companies, mortgage lenders, auto lenders and cell phone companies
• Law enforcement and FBI
• Government agencies and child support agencies
• Collection agencies working for one of your creditors
• Companies offering pre-screened offers of credit, such as pre-approved credit card offers
• Companies that offer credit monitoring to consumers
• You can still receive your credit report directly

How do you set up a credit freeze?

To set up a credit freeze, you would contact all three national credit report agencies – Equifax, Experian and TransUnion – and request the freeze either online or by mail.  You will be given a PIN number that can be used to unfreeze (or “thaw”) your credit reports.  You can thaw them for all creditor’s access for a specific time frame or you can thaw them only to allow one creditor to have access to your credit file for a specific time frame.  The freeze remains until you cancel it.

How do you lift a freeze?

The freeze can be lifted within 15 minutes to 3 days depending upon state regulations.  You can contact the three national credit reporting agencies either by email, writing or phone to lift a freeze.

One of the challenges is to determine the amount of time to lift the freeze when you are applying for credit.   If you plan to be seeking credit, it is not a good idea to freeze your credit files. It can be costly and the timing of the “thaw” and refreeze process can be complicated.  You don’t want to apply for credit and then incorrectly time the thawing of your credit reports and not allow the creditor to pull your file/s.

What does it cost?

A freeze can cost anywhere from $3 to $10 at each bureau the price is set by the state. It can cost you from $3 to $10 to lift the freeze at each bureau even for a short period of time. These fees can be waived if you are a victim of identity theft and have a valid police report or report from a government agency such as the Department of Motor Vehicles (DMV).  Some states require them for free for residents over 65 years of age.

What doesn’t it do?

It doesn’t prevent ID theft of your existing accounts or credit cards. It just prevents them from opening new accounts in your name.  ID thieves can still open non-credit accounts in your name that don’t require a credit report.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Credit Monitoring, Credit Report, Money & Identity

This post was written by John Ulzheimer