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Should You Freeze Your Credit?

It is important to take secure measures to protect yourself from identity theft. And with all the hackings at Target and other large retail stores, this has become even clearer recently. In the past, you may have thought that keeping your credit card information private and close to you at all times would stop identity theft. But with the new hackings, it looks like that’s not enough anymore. Hackers can get your information simply because you used your credit card. And then they can start running up charges on your existing accounts or opening new ones.
As a result, more and more people have begun freezing their credit. By doing this, they assume that they can stop fraudulent activity before anything happens.

So what exactly is a credit freeze?

Also known as a security freeze, a credit freeze is when you block access to information in your credit reports to prevent identity theft and fraudulent activity. Even if you haven’t been a victim of identity theft, a credit freeze can be a preemptive measure to make sure it doesn’t happen. Businesses check your credit reports before lending you money, so placing a freeze on your account will stop identity thieves from creating new accounts in your name. Freezing your credit report is a great way to insure that identity thieves cannot open any new accounts. And a credit freeze has no impact on your existing lines of credit, so you can continue to use your credit cards regularly.

How do you freeze your credit?

To freeze your credit reports, you must contact each of the 3 major credit bureaus: Equifax, Experian, and TransUnion. You will need to give them personal information such as your name, date of birth, and Social Security number, and then request to freeze your credit. If you are a victim of identity theft, you can place a security freeze on your account for free, providing you file a copy of your police report, DMV investigative report, or Federal Trade Commission Identity Theft Report. If you are not a victim, you will have to pay a fee that varies based on your state of residence (typically between $5- $10 per report). Once you have applied, you will receive a PIN number from each credit bureau. You will need to use these PINs in the event that you need to temporarily lift a credit freeze and reinstate it.  
Related Article: Identity Theft Tips: Mix up your passwords and make them strong                                                                                                                                                                                                                                          

Should you freeze your credit?

Although a credit freeze may seem like a great way to prevent identity theft, it can be costly. If you’re planning any action that requires a credit check (ex: opening a new credit account, renting an apartment, applying for a loan, opening a new utility or cell phone account), you probably want to hold off. You will have to pay a small fee for each bureau every time you want to unfreeze it. These small fees will add up fast. Plus, it can take up to five business days to thaw your reports, which may be a hassle if you need those reports fast. In addition, although credit freezes are a great way to prevent the opening of new accounts, it does not stop identity theft altogether. As freezing your credit does not stop the usage of your credit cards, a hacker can still make charges to existing accounts. So, even if you do freeze your credit reports, you should still monitor all your bank and credit card statements for unauthorized transactions. 
Credit freezes can be a great way to stop an identity thief from opening up accounts in your name, but think twice and make sure it’s best for you before placing a security freeze on your account!
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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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