With so many data breaches and credit card hacks in the news and on your Facebook feed, it’s no longer a matter of if someone will try to steal your personal information—it’s a matter of when. In fact, 14.4 million people were victims of identity theft in 2018.1 That’s pretty scary! But there’s a way you can protect your info and lower the risk of strangers taking out credit in your name—by freezing your credit.
Just like Mr. Freeze from Batman or Elsa from Frozen, credit freezing can stop your enemies (aka fraudsters) in their tracks and keep them from doing more harm. Here’s what you need to know about how to freeze your credit so you can protect yourself from identity thieves.
What Is a Credit Freeze?
A lot like storing your valuables in a safe, a credit freeze is a way to lower the risk of identity theft by locking others out of your credit report. Most creditors (the people who loan you money) check your credit before letting you do things like buy a house, lease a car, or take out a loan. But freezing your credit can stop creditors from approving new accounts, which helps prevent random people from opening up new lines of credit in your name without you knowing. Of course, if your credit is frozen, that means you won’t be able to open a new account, either (like to take out a mortgage). But you can always unfreeze your credit, or temporarily lift the freeze, whenever you want. But before you put on your parka, here are some things you should know about freezing your credit:
It does not guarantee a creditor won’t still give a credit card to someone pretending to be you. There’s always a chance they won’t look up your credit first. But freezing your credit does lower the risk.
Someone can still try to hack into your existing accounts and buy things with your money. But if someone does steal your identity, credit freezing can help stop the thief from opening new accounts and causing even more trouble.
It does not affect your credit score—but if you’ve got any errors on your credit report, you’ll want to fix those before you decide to freeze your credit.
You—and your current creditors, debt collectors and some government agencies (like child support)—will still be able to see your credit report. It just won’t be available for any new lenders to see.
It does not keep credit card companies and other businesses from trying to sell you preapproved credit offers based on your current credit info.
When Should You Freeze Your Credit?
Personal Data Breaches
We hear a lot about data breaches (think Target or Capital One), but what exactly are they? A data breach is when someone gets their hands on private or sensitive information—like credit card or social security numbers—without permission. And since so many of us store important info like that online, there’s a higher chance people will be able to steal it.
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Now, freezing your credit can’t prevent someone from stealing your information, but it can stop them from using it to open up new lines of credit—and scoring that new gaming system at Best Buy. So, if you know there’s been a breach of your personal account or a breach in a company that stores your data, go ahead and put your shields up with a credit freeze.
If a data breach is when someone steals personal information, identity theft is when someone uses that information to get into your accounts, open new accounts, or make purchases using your money. Unfortunately, identity theft is just about as common as the flu nowadays. And it can be a nightmare trying to clean up the mess someone else leaves behind when they pretend to be you.
That’s why it’s so important to defend yourself from identity theft by doing things like checking your cybersecurity and changing your passwords. But the good news is that freezing your credit can keep identity thieves from going out and opening accounts in your name from here to Timbuktu.
Protect Your Child’s Credit
Sadly, even your kids aren’t safe from identity theft. But did you know you can freeze your child’s credit to stop people from opening accounts in their name? Since you have to be at least 18 years old to use credit, a credit bureau will have to open a credit file for your child in order to freeze it. But it’s super simple—all you have to do is fill out a child credit freeze request form and mail it to each of the credit bureaus, along with copies of important documents (like a birth certificate, social security card, etc.). If your child is 16 or older, they can do this themselves. You can also check your child’s credit online for free to make sure they aren’t already a victim of identity theft.
How Do You Freeze Your Credit?
Freezing your credit is a lot like doing the dishes. It’s not hard—it just takes some time on your part. All you have to do is contact the three major credit bureaus (Experian, Equifax and TransUnion) and let them know you want to freeze your credit. You can do this on their website, by mail, or by calling them directly.
Then you’ll set up a PIN that allows you to freeze and unfreeze your credit report whenever you want. So even if someone has your social security number or other personal information, they can’t touch your frozen credit without that PIN. And it doesn’t take long for the credit cold snap to kick in—credit bureaus have to place the freeze within one business day if you request it online or by phone, and within three business days if you mailed in your request.
How Do You Unfreeze Your Credit?
To unfreeze your credit report, all you have to do is let the credit bureaus know you want to lift the freeze. There’s even an option to lift the freeze temporarily if you want to apply for something that needs a credit check. But keep in mind that it could take anywhere from several seconds to several days for your credit report to “thaw” so creditors can see it again. Yeah, it’s kind of a pain to keep contacting each credit bureau every time someone needs to see your credit report, but it’s less of a pain than having someone try to take out a mortgage in your name.
Pro tip: If a potential employer needs your credit report because you’re applying for a job, you can always ask them which credit bureau they will check with so you don’t have to contact all three.
What Does It Cost?
Nothing! You used to have to pay $3–12 to each credit bureau whenever you wanted to freeze or unfreeze your credit. But after the great Equifax data breach of 2017 (which leaked the personal information of 147 million Americans), the government decided to make it easier and cheaper to protect your personal information.2 So, as of September 2018, you can freeze and unfreeze your credit for free! And don’t forget that you can also request a free credit report from one or all three of the major credit bureaus once a year, even if your credit is frozen.
The Pros and Cons of a Credit Freeze
Now that we’ve covered the basics, here’s a look at some of the pros and cons of freezing your credit:
Identity thieves can’t open new credit accounts in your name.
There are usually fewer cases of fraud if someone steals your identity.
It’s free to freeze or unfreeze your credit.
It doesn’t affect your credit score.
You can still see your credit report.
It doesn’t stop someone from stealing your personal information or hacking into an existing account.
You have to lift the freeze if you want to open a new line of credit.
It could slow down any applications that require a credit check.
You have to keep track of a PIN number.
Now that we’ve covered the credit freezing basics, let’s take a look at some other ways to protect your identity.
What Is the Difference Between a Credit Freeze and a Credit Lock?
Once the government put the free in credit freeze, credit bureaus quickly realized they weren’t going to make money every time someone decided to freeze or unfreeze their credit report. So they came up with credit locks. These are basically the same thing as credit freezes—except they’re usually not free.
The only benefit to a credit lock is that you can immediately freeze and unfreeze your credit with the touch of a button on your phone. But credit locks offer less legal protection because they’re not controlled by state law like credit freezes are. Even if they seem more convenient, credit locks are just a way for credit bureaus to try and make back the money they were getting before—so you’d be better off sticking with a credit freeze.
Other Ways to Defend Against Identity Theft
Even if you have a freeze on your credit and your cybersecurity seems to be as secure as Fort Knox, you still need to check your credit and bank statements regularly to make sure no one’s trying to break in. Credit monitoring services are great because they keep an eye on your credit for you and alert you any time they notice something fishy going on. But while credit monitoring is important, it only makes you aware of a problem—it doesn’t stop it from happening. So, you’ll want to make sure you have other defenses in place to combat identity theft.
Let’s say a credit monitoring service spots some strange activity on one of your accounts and you think you might be a victim of identity theft. Or maybe you’re worried it might happen because your information is at risk (like if someone stole important documents or cards from you). If that happens, you can immediately place a fraud alert. A fraud alert is similar to a credit freeze because it helps keep people from opening up new accounts in your name.
The main difference is that creditors can still see your credit report—they just have to verify your identity first. And when you contact one of the credit bureaus about the fraud alert, they’ll let the other two know (so you don’t have to). The downside is that there’s no penalty for the credit bureau if they choose to ignore a fraud alert and give a creditor your information anyway, without confirming your identity first. (Seriously?) Plus, fraud alerts only last for up to a year, so they aren’t going to be as effective as a credit freeze. But it doesn’t hurt to place a fraud alert if you think someone has your personal info.
Identity Theft Protection
Identity theft can rob you of more than just money or good credit. Police reports, phone calls, going through bank statements—it can cost you countless hours and sleepless nights. But imagine having someone on your side who will do the work for you. Identity theft protection is one of the best things you can get to save yourself the time and stress of trying to fight off cyber thieves by yourself. With Zander Insurance, you get a Certified Recovery Specialist who will contact creditors for you. They take the time to explain what happened and provide the necessary info so you can get your identity—and your life—back. It’s too much of a risk to not have it—get identity theft protection today!
Cut Credit From Your Life
One of the best ways you can lower the chance of someone hacking into your credit accounts is by not having any open credit in the first place. When you don’t borrow money, you can freeze your credit report—and let it stay frozen! (We’re talking deep freeze.) But quitting credit does more than just help protect you from identity theft. It frees you up to actually win with money!
Sound too good to be true? Start a free trial of Ramsey+ and take control of your finances! You'll learn how to ditch credit for good so you can focus on paying off your debt, saving for emergencies, and building wealth.