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How to Freeze Credit and When You Should

December 4, 2020

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If you think your identity has been stolen, you may need to know how to freeze credit.

Banking online means storing personal information in the cloud. Companies with your personal info do their best to protect it, but hackers are always finding new ways to break in.

Nowadays online identity theft is big business. 

In 2018, 14.4 million people were victim to identity fraud, totaling $1.7 billion in damages. 

If you’re considering a credit freeze, keep reading.

What’s a credit freeze?

A credit freeze is when you ask one of the main credit agencies to stop new lines of credit in your name. A credit freeze is free and will not hurt your credit. 

A credit freeze also blocks most companies from accessing your credit report until you remove the freeze. 

So if you freeze your credit, it will also prevent you from getting new lines of credit like a car loan or credit card.

A credit freeze will not stop you from applying for a job, an apartment or insurance. 

If you need to thaw your credit for a new loan application, you can usually do it with a password or PIN. But you’ll need to contact all three of the major credit agencies.

Credit freeze vs fraud alert

A credit freeze is usually used when you’ve been a victim of identity theft or fraud. If you haven’t been victimized, a credit freeze may be more than you need.

Another option is creating a fraud alert.

A fraud alert lets lenders know that if they receive an application for credit in your name, they have to verify it’s you before going any further. 

This option is less severe than a credit freeze because it doesn’t stop new credit in your name. It only provides an extra layer of protection.

If you don’t think your identity was stolen, a fraud alert might make more sense than a full on freeze. 

If you request a fraud alert with any one of the three credit bureaus, the alert is automatically carried over to the other two. So you only need to request a fraud alert once.

When to freeze (and unfreeze) your credit

There are times when you need to protect your credit, either by freezing your credit or by requesting a fraud alert. 

Here are a few situations where you should take action:

  • If you find unexplained bills or collection letters in the mail or email

  • If you see withdrawals or transfer in your bank account that you didn’t make

  • If you notice suspicious activity on your credit report, such as a new credit account you didn’t sign up for

  • If you get a notice your personal information has been compromised in a data breach

If you have proof that someone is using your identity, it’s probably best to freeze your credit. If you only suspect there may be wrongdoing, requesting a fraud alert may be enough. 

You should unfreeze your credit anytime you want to apply for a new line of credit.

Lenders will need to look at your credit reports and credit scores, and they won’t be able to access your personal credit information if your credit is frozen.

Limits of a credit freeze

A credit freeze isn’t a magic bullet. There are other ways you can still fall victim to financial or identity crime even if your credit is frozen.

A credit freeze is only designed to prevent other people from taking out new lines of credit in your name. 

Even if you freeze your credit, your credit card number could still be stolen and used. Same goes for your bank account and social security number. 

It’s important to keep in mind that a credit freeze only protects you from fraud involving new credit. You still need to keep an eye on your accounts and personal information.

How to freeze your credit

For a credit freeze to be effective, you’ll need to request it with all three of the major credit bureaus.

The three bureaus are Experian, TransUnion, and Equifax.

If you want to freeze your credit, you’ll need to answer some questions and provide personal information like your SSN, photo ID and a proof of residence. 

Here are the links to the three websites you’ll need to freeze your credit:

Depending on the bureau, you may get a PIN or password you can use to unfreeze your credit. Make sure you keep this information in a safe place. If you lose it, the unfreezing your credit will be difficult and will require lots of paperwork. 

Freezing your credit is a serious step. But if you think you’ve fallen victim to identity theft or fraud, it’s best to look into it right away. 

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).

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Julian Dossett

Julian Dossett

Julian is a tech and finance writer, covering stories from artificial intelligence and cryptocurrency to personal loans and credit cards. His work has appeared at The Simple Dollar, Bankrate, and Blockchain Beach. As a former Cision editor, Julian worked across the table from many of the nation’s most trusted brands. He’s currently based in New Mexico.

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