A credit freeze, which is also referred to as a security freeze, allows you to restrict access to your credit report, thus allowing you to fully take control over your financial information.
By freezing your credit account, you stop the release of your credit score and other reports. If you opt for a credit freeze, potential creditors will not be able to access your credit report. However, it can help stop identity thieves from opening up additional lines of credit in your name.
It is important to note that a credit freeze is free and does not affect your credit score. However, you will have to enact this freeze between all three credit bureaus for it to be effective. To learn more about whether or not a freeze is right for you, continue reading.
How to Freeze Your Account
To freeze your account, you should contact the credit reporting agencies. You will find instructions plus other relevant information on their websites. You will need to provide your personal information such as your name, date of birth, address, Social Security number, plus any other relevant information.
After your freeze has been accepted, you will be issued a PIN, which you can use to unlock your files in the future should you wish to avail of your credit report to lenders. Keep your PIN in a secure place and never share it with anyone, as this is what you will use if you want to unfreeze your credit.
Pros of Freezing Your Credit
These are some of the advantages of freezing your account. Learn more about them by reading below.
It prevents anyone from opening new lines in your name
Once you freeze your account, no one will be allowed to open new lines of credit using your name. In the event that there is any fraudulent activity, it will automatically be blocked.
This is because before lenders accept your application, they have first to check your credit file to confirm if you are responsible enough and whether you will pay back the loan.
Therefore, a credit freeze blocks lenders from accessing your credit file. However, should they access your already existing accounts, they could still take advantage and misuse them.
There is no penalty
Another advantage of freezing your account is that it does not affect your credit score. However, other factors such as debt and failure to pay on time will still be able to affect your credit score during that time.
Additionally, a credit freeze is completely free. So, you won’t have to pay anything for this procedure.
Cons of Freezing Your Credit
As with most things in life, there are also disadvantages to a credit freeze. Learn about them below.
You have to remember your PIN
One of the downsides is always having to keep track of your PIN. Once you freeze your account, you will be given a PIN. You must keep care of this PIN because should you want to lift the freeze in the future, that’s the PIN you will be required to use.
Should you lose or forget it, you will have to go through several steps to restore or secure a new one.
Nobody has access
Another disadvantage of freezing your account is that you will have to lift the freeze to give creditors access to your file. So, while you are able to block thieves from opening new lines of credit, you are also blocking yourself from doing so.
Lastly, freezing your credit does not stop thieves from accessing your already existing accounts. Though it might stop thieves from opening an account using your name, it can’t prevent them from accessing your already existing accounts.
So, don’t be fooled into thinking you are completely protected with a credit freeze, that just is not the case.
Freezing an account comes with its pros and cons, and depending on your current status, you should be able to know which step to take.
This can be a useful tool but can also make life difficult for you if you need more lines of credit. Ultimately, the ball is in your court.