What is a Security Freeze?

If you think your personal information has been compromised or if you would prefer an extra layer of protection on your credit, a security freeze might just be what you’re looking for.

Placing a security freeze or credit freeze on your credit file is an action you can take to restrict access to your credit report. Activating one prevents prospective creditors from pulling your credit report. Most creditors will not extend credit if they cannot access your credit report, so security freezes can restrict any new credit from being issued in your name, such as the opening of a new credit card account or new loan. Security freezes can be a valuable tool for victims of identity theft or those who are not actively seeking credit. Let's review the ins and outs of a security freeze.

Security Freezes

Activate/Deactivate

To activate and deactivate security freezes on your primary credit reports, you'll need to contact each of the three major credit bureaus separately (TransUnion, Equifax and Experian). Each credit bureau has specific instructions for how to activate or deactivate a security freeze, which may also vary by state. For example, you may need to choose or be given a password/PIN when you set up the freeze and if so, you'll likely be asked for it to lift the freeze if you want to do so.

Time and Cost

Keep in mind that putting a security freeze in place and lifting it (even temporarily) often cost fees, though many states require credit bureaus to provide free security freezes for victims of identity theft. Make sure to check the rates or eligibility requirements for free security freezes at each credit bureau. Lifting a security freeze can also take time so make sure that if you need to grant someone access to your credit file, you allow enough time for the bureaus to process your request.

Now let's discuss what activating a security freeze doesn't accomplish.

What Security Freezes Don't Do

There are a few things that security freezes don't do. They don't:

• Affect your credit score
• Prevent all entities from pulling your credit report. A limited number of entities, like certain government agencies or your current creditors or collection agencies acting on their behalf, may continue to access your credit report.
• Stop you from gaining access to your free annual credit report from each credit bureau
• Stop you from receiving prescreened credit card offers
• Prevent someone from using your existing credit lines without your permission. (If you think one of your current accounts is being or could be abused, make sure to contact the lender and bureaus immediately to determine what you should do next.)

Security freezes are one option to consider when managing access to your credit reports. Also, you may want to consider a fraud alert, which generally permits creditors to access your report but notifies them to take additional identity verification steps during the application process.

Fraud Alerts

Security freezes can be convenient because they can generally prevent unauthorized new credit from being issued. However, they can also restrict your ability to obtain new credit. If you'd prefer to not have such a high restriction on access to your credit report, then an alternative to a security freeze is to place a fraud alert on your file.

A fraud alert is similar to a security freeze, except that instead of freezing your credit, a fraud alert notifies lenders to take additional steps to verify your identification before they extend a credit line or loan in your name. A fraud alert is free and the major credit bureau you contact to place one is required to notify the other two major credit bureaus to also place an alert on your file. Like security freezes, fraud alerts won't affect your credit score, keep you from obtaining your credit report, or prevent access to existing accounts.

Bottom Line

If you're concerned about the safety of your credit, you may want to consider a security freeze or fraud alert. These tools can provide additional security on your credit profile, but they don't stop all credit-related actions. Make sure you have a complete understanding of each measure before deciding which option may be right for you.