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Are you worried that your identity could be stolen? You’re certainly not the only one. In 2014 alone,17.6 million Americans fell victim to identity theft, and that statistic increases every year. What’s the best way to protect yourself from thieves stealing your personal information and opening financial accounts in your name? Placing a credit freeze, say experts. What exactly is a credit freeze, what does it mean for your finances, and how do you freeze your credit? Keep reading to find out the answers to these questions and more.
What is a Credit Freeze?
A credit freeze, also referred to as a security freeze, is a method you can use to restrict the access others have to your credit report. When you establish a credit security freeze, thieves have a much more difficult time opening accounts in your name. Why? Most creditors must review your credit report in order to approve loans, new credit cards and other financial accounts. But with a credit freeze in place, creditors don’t have access to your credit report.
Freezing your credit is relatively inexpensive and doesn’t affect your credit score. A credit freeze only applies to your credit reports — it’s not the same as a credit card freeze, and you still have access to all of your existing accounts and credit cards.
Is a Credit Security Freeze Right for You?
There are a few factors you should consider before freezing your credit. There are no absolutes; it really comes down to a personal decision.
- Have you already been a victim of identity theft? If so, you’re at a greater risk. Thieves sometimes sell or trade your personal information once they gain access, so your information could still be out there.
- What are your upcoming credit plans? If you’re planning in the near future to purchase a house or car or open up a new credit card account, you may want to wait to freeze your credit report. Otherwise, you’ll have to temporarily lift the freeze with each credit bureau, and you could incur fees to do so. A credit freeze can also affect your ability to open up new service accounts, including a new mobile phone contract.
- Have you considered credit monitoring or identity theft protection as an alternative? If you’re concerned about not being able to access your credit reports if they’re frozen, for an emergency loan, for example, you should look into a credit monitoring service or an identity theft protection service. These services regularly track your credit reports and other financial accounts and immediately alert you of any unusual activity or potential identity threats. Check out our Best Credit Monitoring Service comparison and our What is the Best Identity Theft Protection articles to see if these services might be a better option for you.
How Do You Freeze Credit Reports?
Freezing your credit is a relatively inexpensive and easy process. There are three national credit bureaus, Equifax, Experian and TransUnion, and each provides its own credit report. Different creditors access some or all bureaus, so it’s important to freeze your credit with all three bureaus. To freeze your credit, all you need to do is call each bureau:
- TransUnion – Visit Website (or call 1-888-909-8872)
- Experian – Visit Website (or call 1‑888‑397‑3742)
- Equifax – Visit Website (or call 1-800-349-9960)
They’ll ask you to provide your name, date of birth, social security number, address and additional personal information to verify your identity. Typically, you’ll incur a fee to freeze your credit, but that fee varies by state. Most fees range from $5 to $10 for each bureau.
Equifax, Experian and TransUnion will each send you a confirmation of your freeze, including a PIN (personal identification number) or password. It’s important to keep each PIN or password in a secure place, because you’ll need it when you want to unfreeze your credit reports.
How Do You Unfreeze Credit Reports?
To lift a freeze on your credit report, you must contact each credit bureau again. You can either lift the freeze altogether or put a temporary lift in place. Credit bureaus are required to lift a freeze within three business days after your request. You’ll incur fees to unfreeze your credit, which vary by state.
Tip: If you only need to temporarily lift your credit freeze because you’re applying for a loan or new credit card, try to find out which credit bureau the creditor uses. You may be able to avoid the trouble and added expense of unfreezing all three credit bureaus’ reports and only lift the freeze on the one your creditor is contacting.
What Do Credit Experts Have to Say?
On the heels of high-profile hacking attacks in 2014, Fox Business News ran this informative report about freezing your credit. Check out the video segment.
Why Protect Yourself from Identity Theft?
A credit freeze doesn’t protect you from all kinds of identity theft, but it can be an excellent safeguard against identity thieves opening up new accounts in your name. According to Consumers Union, the average time it takes a person to recover from new account identity theft is 40 hours. It’s one of the hardest forms of identity theft to recover from. Whether you choose to freeze your credit or subscribe to an identity theft protection service or credit monitoring service, which cover more types of identity theft than freezing your credit, it’s wise to do whatever you can to protect yourself.
What methods of identity theft protection do you recommend?