Reports of data breaches, malware attacks, and other identity theft schemes have many Americans scrambling for ways to protect their financial information.
A credit freeze, which prevents the opening of any new credit accounts in your name, can be a useful tool. It works because once you've frozen your credit, new lenders can't look at your credit report without your permission, which stops identity thieves cold in their tracks.
Is it right for you? If you think or know your information has been compromised, there's no harm in initiating a freeze because you can lift it easily if you want to apply for credit.
However, it's important to remember it's not a silver bullet. There are still ways criminals can access your existing accounts. When it comes to protecting your personal and financial information, a multiple front approach works best. So think of a credit freeze as just one more tool in your arsenal against cyberthieves.
Here's what you need to know before you put your credit on ice.
How it works:
- A credit freeze only affects new credit applications.
- A credit freeze is free and never expires.
- You will need to contact all three credit reporting agencies: Experian, Equifax, and Transunion.
- Requests can be made online or by phone. Be prepared to provide personal information like name, address, date of birth, and Social Security number.
- Each credit bureau will give you a unique PIN or password. Don't lose it. It's the only way you will be able to permanently or temporarily lift the credit freeze.
- You can lift the freeze anytime, in a matter of minutes.
A credit freeze does not:
- Affect your credit score.
- Prevent you from using your credit cards or any other forms of credit.
- Stop any prescreened credit offers from being mailed.
- Prevent you from getting your free annual credit report.
- Prevent identity thieves from making charges to your existing accounts.
- Stop existing creditors or collection agencies from accessing your credit report.
- Stop you from opening new accounts, renting an apartment, buying insurance, or anything else that requires a credit check. You can temporarily lift a freeze for specific transactions by providing the PIN along with your application for credit, housing, or even employment. You simply have to inform anyone doing the background check that the PIN is required to access your credit report. Since each credit bureau has its own PIN, be sure to ask which one they will be using.