How and Why to Freeze Your Credit

Why you should consider a credit freeze

A credit freeze can go a long way toward preventing someone from using your identity. While there’s no sure-fire way to prevent someone from stealing your identity and damaging your credit in the process, freezing your credit can offer a good deal of protection and give you peace of mind. And you can freeze your credit for free. You may want to consider it as doing so will mean that even if a criminal gets your information, it will be difficult or impossible for that person to open a fraudulent account in your name.

Can I freeze my credit for free?

In 2018, a new law made it free to freeze your credit. Prior to the new law, each of the three credit bureaus could charge you if you wanted to put a freeze in place (usually around $10 at each bureau). Then, you often had to pay again to unfreeze or thaw your credit if you wanted to do something that required a credit check, like applying for a new loan. However, after the massive Equifax data breach in 2017, consumer advocates called on Congress to provide free access to credit freezes.

What does freezing my credit do?

What is a credit freeze? When you freeze your credit, the credit reporting bureaus can’t give any information to anyone who makes an inquiry about you. Typically, businesses inquire about your credit when you (or someone posing as you) are trying to, for instance, open a new credit card, take out a loan to buy a car or rent an apartment. The credit check helps the business determine if they want to lend or rent to you, and it can help set your rates and lending terms for loans and credit cards.

When you freeze your credit and the business can’t get any information about you, it typically stops the process—which means a fraudster will be unable to open an account while using your identity. You can also freeze your child’s credit or freeze credit for a loved one (with the proper legal documentation indicating your ability to legally act on their behalf).

Why doesn’t everyone freeze their credit?

Freezing your credit sounds like a pretty easy and logical move to protect your identity, so why doesn’t everyone freeze their credit? Freezing your credit does come with a degree of inconvenience. In order to freeze your credit, you’ll have to contact each bureau separately and work with each of them to fully freeze your credit. Just like it would stop a criminal from opening an account in your name, it will also prevent you from taking out credit until you temporarily unfreeze your credit when you're ready to make a big purchase. So it can delay credit check process if you’re not prepared.

Credit monitoring vs. credit freeze

You could opt for credit monitoring instead of a full freeze. When you pay for a credit-monitoring service, you’ll get alerts about any activity involving your credit report. This can quickly bring a potential problem to your attention—but it’s not preventative, so you won’t know if someone has used your identity until after it happens.

You can also request a free copy of your credit report annually from each of the major credit bureaus and check it for any activity you don’t recognize. If you find anything suspicious, report it immediately and take steps to lock down your credit through a fraud alert or credit freeze.

Credit freeze vs. credit lock

A credit freeze and a credit lock have the same goal: They’re there to protect your personal data. How they work, however, is a bit different. You put a credit freeze on your accounts for free by working with the credit bureaus to put the freeze in place (and remove it). With a credit lock, you may have to pay an added fee, but you have more freedom to lock and unlock your credit, making it a convenient option for protecting your identity while still having the ability to make purchases.

How to freeze your credit

If you want to freeze your credit, you need to do it at each of the three major credit bureaus:

• Equifax (1-800-349-9960)

• TransUnion (1-888-909-8872)

• Experian (1-888-397-3742) .

Once you contact the credit bureau, you’ll need to provide your social security number, date of birth and address to initiate the credit freeze. Depending how you make the request (online or by phone), you may also need to provide a passport or driver’s license or proof of address and answer some authentication questions. If you request a freeze, be sure to store the passwords you’ll need to unfreeze your credit in a safe place.

Whether or not you choose to freeze your credit, fraudsters could still take advantage of you by getting things like your credit card number(s) or passwords to online accounts. Make sure you’re taking the proper steps to secure your information so that it doesn’t fall into the wrong hands.

Can freezing your credit hurt your credit score?

Freezing your credit will not affect your credit score in any way. Freezing your credit also shouldn’t get in the way of you being able to open new accounts or make credit inquiries (for things like taking out a loan or buying life insurance) as long as you unfreeze your credit in time.

Can you keep building credit while you have a credit freeze?

Freezing your credit doesn’t have any impact on revolving credit , like credit cards. So, even if your credit is frozen, you will be able to continue building credit by using revolving credit and making regular payments to that credit (and other existing lines of credit). If you’re looking to build your credit by adding another line of credit, you’ll need to unfreeze your credit to do so.

When and how to unfreeze your credit

The good news is: Unfreezing your credit can be done relatively quickly. In fact, the three major credit bureaus are required to unfreeze your credit within an hour of you making the request. In many cases, it’s almost instant.

The process to unfreeze your credit is similar to the process for freezing it. You’ll reach out to the credit bureau (typically online) and request them to unfreeze your credit, providing required verification information and documentation as needed. You can either request that the bureau permanently unfreeze your credit (then refreeze it again when you’re ready) or unfreeze for a specified time frame. When that time frame expires, the bureau will then automatically refreeze your credit.

Is freezing your credit a good idea?

Freezing your credit can be a great way to protect your identity, but you’ll want to take into account any plans you have for big purchases in the future. It’s all about planning ahead. A Northwestern Mutual financial advisor can help you understand important financial steps to take to work up to those big purchases and help prepare you for other financial milestones in your future.