What Happens if You “Freeze” Your Credit?

As you might have heard, the recent Equifax security breach leaked the names, addresses, and Social Security numbers of about 143 million Americans. With this information now in the hands of cyber criminals, many of us are at risk of identity fraud and theft. One possible solution, already implemented by many, is something called a “credit freeze”.

If you freeze your credit, the three major credit reporting agencies cannot provide your credit history to new creditors. Essentially, this means anyone applying for a credit card or loan in your name would receive a denial. When you’re ready, you can unfreeze, or “thaw” your credit. You must pay a fee to the credit bureaus in exchange for this service, both when you implement the freeze and again when you “thaw”, but many people consider it a small price to pay for the protection provided.

The obvious upside to freezing your credit is to protect your identity and prevent fraud under your name. But of course, this also means you can’t obtain a new mortgage, loan, or credit card. If an insurance policy is up for renewal, unavailability of your credit report might also cause delays as you sort out the problem with your insurance company, or could result in higher rates.

The freeze can even impact your ability to do something as simple as sign up for a new utility service (for example, you want to switch television or internet providers). This might not matter too much, if you don’t anticipate needing credit any time soon, but could feel like an inconvenience in the event that you need quick access to credit (or a service provider needs it). In that case, all you need to do is call the credit bureaus and remove the freeze.

Aside from freezing your credit, you could also sign up for a credit monitoring service, and review your credit reports regularly. It would also be a good idea to contact all of your credit card companies, and set up notifications via text or email. This way you will know instantly whenever your card number is used to make a purchase.

Protecting your identity can feel like a part-time job, but it is worth the effort. Once your information is stolen and fraud committed in your name, undoing the damage is much more difficult than regular monitoring would have been.

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