A credit freeze is exactly what it sounds like. It freezes your credit so that no one can pull a credit report for you. This leads to no new credit being issued in your name. It's a good way to prevent new debts or identity theft.
A credit freeze isn't the only protection for your credit, but it is the most secure option available through the credit bureaus. So what exactly does freezing your credit do and how do you go about it? Here's what we know.
A credit freeze stops lenders from pulling a copy of your credit report when new applications come in for things like mortgages, auto loans, and credit cards. It doesn't affect your current, open lines of credit, just prevents new ones. If you have a credit freeze in place, you know that you have to remove it before applying for a new line of credit.
This makes it an effective tool in the fight against identity theft since a lender can't approve someone for a loan without seeing their credit.
When you freeze your credit, you keep scammers away because it prevents lenders from checking your credit reports. Once you freeze your credit, if a data thief attempts to apply for a new line of credit in your name, it gets rejected by the lender because they’re unable to access your credit information.
A credit freeze is a great safety feature provided by all three major credit bureaus, TransUnion, Experian, and Equifax, and many security experts recommend using a credit freeze if you suspect your identity has been compromised.
Some features that can protect you against identity theft, such as a fraud alert are shared among credit bureaus, meaning you only have to alert one bureau to report a fraudulent change, and they will share this information with the other bureaus.
A credit freeze is different. Since a credit freeze is voluntary, you need to contact each bureau individually to freeze your credit report with them. If you truly are concerned about identity theft, it's a best practice to freeze all three, or you are leaving yourselves vulnerable to some threats.
To freeze your reports you can start easily by visiting the website for each bureau. Credit freezes are also available by phone or by mail-in request.
In order to freeze your credit, you need to visit the credit bureau(s) where you plan on freezing your report. This protective service is free through all three bureaus. However, each bureau has its own process, so you are likely to have to sign up for an account and may be asked to create a PIN.
Once you've done this you must typically provide the credit bureau with your personally identifiable information, and some proof of identity and address. The information they ask for usually includes:
Once you're verified, you can choose to freeze your credit.
Keep in mind that if your credit report is frozen, you will have to manage your account personally when you plan to take on any new lines of credit. This will mean logging in and unfreezing your account when you need a loan, which could take a little time. Make sure to give yourself some wiggle room before you need to use your credit, and unfreeze it within an appropriate amount of time.
Luckily, with each credit bureau, you can set up automatic freeze and unfreeze dates if you're planning ahead. So, if you know you want to take out an auto loan within the next year, you can set up a tentative unfreezing date around then – saving you the stress of getting denied for financing due to your credit being frozen.
Credit freezes are free at all three national credit bureaus.
A credit freeze is indefinite unless you choose a date to unfreeze it. There is no automatic time limit.
Though they may sound the same, a credit freeze and a credit lock are actually two different things. A credit freeze is a free and secure option, mandated and governed by state laws. A credit lock is determined by a contract between you and the credit bureau and incurs a charge.
Unlike a credit freeze, a credit lock is more convenient in that it’s quicker to undo. You simply log into your account and hit a button to unlock your credit report, and your credit is ready to be accessed.
The biggest drawback to multiple credit locks is the fees associated with them. Credit locks typically come with a monthly or yearly fee for each bureau. Also, credit locks can be issued by credit monitoring services, again, for a fee.
If you're worried that identity theft could harm your credit a credit freeze is a terrific form of protection. However, you won't be able to take on new credit, like a car loan, while a credit freeze is in place.
If you recently thawed your credit report in anticipation of a car loan, but worry a bad credit score is holding you back, don’t. There are plenty of dealerships all across the country that work with bad credit borrowers, all you have to do is know where to look.
Remember, if your credit is frozen, you have to thaw it before taking on a new line of credit like an auto loan. But, once you've done that, a lender should be able to get access to your credit reports and you can start the process of getting the loan you need.
Senior Automotive Financing Editor
Meghan is expertly versed in automotive special financing and pricing analysis, having published hundreds of articles on Auto Credit Express and its sister sites, CarsDirect, and The Car Connection over the past decade. She began her career as a sports writer for the local newspaper in her hometown nearly 30 years ago, and has enjoyed writing ever since. Read more
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