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In the hyper-connected world we live in today, it is no surprise that the prevalence of identity theft has increased significantly over the last several years. Data breaches and other compromises have left consumers prey for cybercriminals, with an estimated 16.7 million individuals impacted in 2017 alone.
There are several methods to safeguard your personal information in the technology era, including having strong passwords, limiting the use of public Wi-Fi, and keeping a close eye on your credit reports. Additionally, placing a credit freeze on your credit profiles through the three major credit reporting agencies can be helpful in the fight against identity theft.
While taking the steps to put a credit freeze in place is a smart way to keep criminals from opening new accounts in your name or accessing your credit report for another reason, many wonder—does a credit freeze affect your credit score? The short answer is no, but there are other implications of implementing a credit freeze.
What is a Credit Freeze?
A credit freeze is the process of placing a stop of sorts on your credit profile. Through each of the three main credit reporting agencies—Equifax, Experian, and TransUnion—you have the option to request a freeze on your credit reports.
This means that no one, including yourself, can apply for new credit while the freeze is in place. Lenders and other new creditors need to review your credit report before approving a new account, and this cannot be done when you have a credit freeze on your reports.
Without verifying this information, a new credit line, mortgage, auto loan, or other credit account will not be established.
Does Freezing Your Credit Hurt Your Credit Score?
A credit freeze does not have an impact on your credit score. It does, however, limit access to your credit report so that new accounts cannot be created in your name. Having a credit freeze in place does not limit access to your own credit report.
For instance, if you were checking your credit once per year but had a credit freeze in place, you would still be able to pull your credit reports from each credit bureau without issue.
It is important to note that identity thieves may still have an opportunity to make fraudulent charges to your current accounts. For this reason, you should continue to monitor account activity over time.
While a credit freeze is helpful from an identity theft protection perspective, a freeze can cause other issues. If you need to apply for a new credit account, you will need to unfreeze your credit report before applying.
How to Freeze Your Credit Reports
Placing a credit freeze is a relatively simple process, although it needs to be done with each of the three credit bureaus. Freezing with only one does not automatically mean your credit profile is frozen with the other two. You can call the credit bureaus directly to request a freeze, submit a request online, or send the request in writing.
In some states, placing a credit freeze comes at a cost. This ranges from $5 to $10 per credit bureau. The credit agency will be able to provide the specific cost of freezing credit when the request is made. Also, to unfreeze your credit, a charge may be assessed. Be sure to check these costs before freezing and unfreezing.
The Bottom Line
Freezing your credit can be a smart way to maintain some control over identity theft and nefarious actors opening new accounts in your name without your knowledge. Be sure to consider your need for new credit before freezing your credit reports and be aware of the cost associated with freezing and thawing your reports.
Also, know that a credit freeze does not inherently protect accounts you already have open, so be diligent about tracking your statements and account activity over time.
Author: Melissa Horton