Phony phone solicitations, identity theft and data breaches are on the rise. With more than 2.8 million reports of fraud in 2021, according to the Federal Trade Commission, it is more important than ever to monitor and protect your financial information. Credit freezes, also known as security freezes, are a way for victims of identity theft or compromised financial information to protect their accounts against fraud. Here’s what you need to know about freezing your credit.
What is a credit freeze?
A credit freeze locks your credit report until you approve its release—making it harder for identity thieves to open new credit accounts in your name. If you’ve frozen your credit, new creditors can’t look at your credit report without your permission. (Your current creditors, government agencies and debt collectors can still access your data.) A freeze doesn’t affect your credit score or prevent you from accessing your own credit report. Your accounts remain open, so it’s a good idea to keep monitoring your bank and credit accounts for signs of fraud.
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Pros and cons of a credit freeze
Pros
No cost to you
Won’t affect your credit score
Won’t prevent you from obtaining your free annual credit report
Won’t impact your current credit accounts
Cons
No guarantee it stops credit or identity fraud
You’ll need to keep track of your PINs
Existing accounts aren’t protected
You’ll have to remember to lift the freeze
How to freeze your credit
Contact all three major credit reporting agencies to complete your request (TransUnion, Experian and Equifax). Throughout the process, you’ll need to verify your identity by entering your social security number, answering some questions and providing further supporting documentation.
Keep in mind that if you plan to open up a new account/loan (mortgage, home equity line, credit card, auto, etc.), or apply for a new job, you’ll need to unfreeze your account. If you need to remove the freeze, you may be charged a fee every time your freeze is lifted for a credit check.
Lifting the freeze
To apply for credit again, you'll need to lift the freeze in one of two ways. Credit bureaus can provide a PIN or do a general lift of the freeze, and both will allow a Creditor to review your credit file. Not all Creditors can use the PIN, so be aware of both methods and ask which method will be required prior to applying.
You can also lift the freeze for a specific time period by contacting the credit reporting agencies. Depending on state law, you may be charged a fee each time your freeze is lifted. To end your freeze permanently, you need to submit a request to the three credit bureaus. In many states, the freeze remains until you request to remove it, but some states remove the freeze automatically after seven years.
If fraud has already occurred, take immediate action to close any unwanted accounts opened in your name. You should also visit www.identitytheft.gov to file an identity theft report. Filing this report serves as proof that you are a victim of identity theft and will also afford you some important rights when you begin to clean up your credit.
Quick Tip
If you want to protect your credit but don’t want to place a freeze, you can issue a fraud alert for free instead. A fraud alert doesn’t prevent creditors from accessing your credit report, but it requires them to verify your identity before issuing credit.
Disclaimer
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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2024 Bank of America Corporation.
