Should You Freeze Your Credit? An In-Depth Guide

Identity theft and account fraud are growing threats, with millions of Americans impacted each year. Given this, more people are considering "freezing" their credit as a preventative measure. But is a credit freeze right for you? This comprehensive guide will examine the pros and cons of credit freezes, who can benefit most, and step-by-step advice on freezing and unfreezing your credit.

What Exactly Does Freezing Your Credit Do?

Freezing your credit locks down access to your credit reports and prevents new accounts from being opened in your name. Here‘s a quick rundown of what freezing does:

Restricts access to your credit reports at the 3 major bureaus (Equifax, Experian, TransUnion).
Stops identity thieves from applying for credit cards, loans, utilities, etc. in your name.
Allows you to block new account fraud while still using your existing accounts.
Does NOT affect your credit score or limit use of current credit cards and loans.
Remains in effect until you choose to lift or remove the freeze.

Basically, a credit freeze blocks new credit inquiries while allowing you to keep utilizing your accounts. It‘s like putting your credit report in a deep freeze, only to be thawed when you need it.

The Scale of Identity Theft Today

Identity theft and account fraud are growing problems today. According to the Federal Trade Commission‘s most recent data:

There were over 1.4 million reports of identity theft in 2021 – an increase of 79% since 2019.
Credit card fraud was the most common type of identity theft reported last year.
Approximately 3% of survey participants became identity theft victims in 2021.
Consumers reported over $2 billion in total losses to identity theft last year.

With data breaches exposing personal information and digital fraud on the rise, these concerning trends are likely to continue. A credit freeze offers protection against one of the most common types of identity theft – new account fraud.

What Can Thieves Do With Your Credit Report?

Your credit report contains highly sensitive personal and financial data that identity thieves can exploit:

Your SSN, birthdate, employment history, current and past addresses
Detailed account information including credit cards, loans, mortgages
Records of credit checks and applications for credit
Public record data including bankruptcies, foreclosures, court judgments

Armed with this information, identity thieves can fabricate enough details about you to apply for credit cards and loans in your name. They can also provide your info to collectors pursuing debt that isn‘t actually yours.

Freezing your report puts this sensitive data in lockdown, preventing criminals from accessing it for fraudulent purposes.

Real-Life Examples of New Account Fraud

To understand how serious the threat of new account identity theft is, consider these examples reported in the news and collected by the Identity Theft Resource Center:

A identity thief opened a fraudulent credit card in a Florida woman‘s name, charging $5,000 in purchases before she became aware. Police were unable to trace the criminal.
An Illinois man discovered 5 credit cards had been opened using his SSN that he didn‘t apply for. He owed over $2,800 on the unauthorized accounts.
A Maryland couple had 8 credit cards opened in their names and maxed out, ruining their credit. Legal action was needed to clear their records.
A Colorado parent found 32 fraudulent credit accounts opened using his minor child‘s SSN that was stolen during a healthcare breach.

These examples show how easy it is for thieves to use stolen information to open new fraudulent accounts. A credit freeze could have prevented criminals from accessing these victims‘ credit reports.

The Pros of Freezing Your Credit

Now that you understand how a credit freeze works and the identity theft risks it can help mitigate, let‘s examine some of the main benefits of freezing your credit:

It‘s the single most effective defense against new account identity theft – No other identity protection service can completely lock down your credit from criminals.
Free to place and temporarily lift freezes – As of 2018, credit bureaus cannot charge fees for initial credit freezes, temporary lifts, or removals. Some states still allow fees for permanent removals.
Works instantly once requested – The major bureaus must place a freeze within 1 business day. Then your reports are instantly locked down.
Won‘t hurt your credit score – Having an active freeze appears only as a notation on your credit file and does not impact your score.
You stay in control – You hold the key to lift the freeze when needed through your PIN or password. No one can access your credit without your consent.
Flexible long-term protection – A freeze remains in place until you decide to remove it, lasting as long or short as you want.

For most consumers concerned about identity theft, the significant protections a freeze offers outweigh the minor hassles. But there are some downsides to consider as well.

The Potential Cons of a Credit Freeze

While generally positive, some drawbacks of a credit freeze to keep in mind:

Inconvenient when you need new credit – You have to contact each bureau to lift the freeze, which takes time and planning.
May cause application delays and issues – Some lenders or businesses may not understand how to process applications with a frozen credit report.
Doesn‘t guard existing accounts – If thieves have your current account info, they can continue making fraudulent charges despite a freeze.
Re-freezing can be problematic – Bureaus may implement security holds after repeated freezes and lifts of your credit, delaying re-freezes.
Can‘t always stop "soft" credit checks – Some businesses may still be able to review limited aspects of your credit report even if frozen.
Not suited for frequent credit applications – Those who open new credit regularly may find lifts too much of a hassle.

The inconveniences when legitimately applying for credit yourself are perhaps the biggest nuisance of credit freezes. But many feel it‘s worth it for the peace of mind.

Alternatives to Credit Freezes

If you find the concept of freezing and unfreezing your credit each time you need it unworkable, alternatives like credit monitoring can provide some fraud protections:

Service	Pros	Cons	Cost
Credit monitoring	Alerts of suspicious activity No credit impact Easy to use	Does not prevent new account fraud Recurring fees	$10 to $40 monthly
Fraud alerts	Free Lenders verify identity	Temporary Does not lock credit	Free – One-year initial, seven year extended
Credit locks	Prevent access like freeze App controls unlocking	Fees Part of paid monitoring service	Varies, typically $10+/month

While not as air-tight as a credit freeze, these services can also help guard against fraud in less intrusive ways. You may want to use them together with freezes for layered security.

Who Should Freeze Their Credit?

Freezing your credit makes the most sense for those at high risk of identity theft and not needing new credit regularly, such as:

Data breach victims – Freezing helps prevent breach exposed info from being used for new account fraud.
Adults who don‘t apply for new credit often – Infrequent credit users get minimal freeze inconvenience while benefiting from strong fraud protections.
Seniors – Older adults are common targets of identity theft and may apply for credit less often.
Children – Kids‘ unused SSNs appeal to identity thieves. Freeze minor children‘s credit until they need it.
Previous fraud victims – Those already victimized once should lock down their credit from further abuse.
Deceased relatives – Freeze the credit of deceased family to prevent fraudulent accounts using their SSN.

Consumers planning to apply for mortgages, auto loans or other major credit should hold off on freezing until approved, then quickly re-freeze afterwards.

Step-by-Step Guide to Freezing Your Credit

Freezing your credit requires directly contacting each of the 3 major credit bureaus. Here is a step-by-step guide to the process:

Determine free vs. fee rules for your state – Most allow free freezes, but some states permit fees. Look up the rules at IdentityTheft.gov.
Contact each credit bureau to initiate freeze – Request the freeze online, by phone, or mail. Provide identifying info like SSN, name, address.
Receive unique PIN or password for each bureau – This will be needed to lift the freeze when you need access to your credit report. Keep these in a secure place.
Review your frozen credit reports – Get a copy of your report from each bureau to ensure no errors or unknown accounts exist. Report any fraud found.
List freeze information for your records – Note the date/time requested, and the PIN/password for each bureau freeze in your identity theft file for future reference.
Check for successful freeze status online – Log in to each bureau‘s website to confirm new accounts are blocked and existing accounts still show.

Following these steps will securely freeze your credit in all 3 bureaus. Now only you can lift the freezes when needed.

Lifting a Credit Freeze When You Need It

Temporarily lifting a credit freeze at one or more bureaus lets legitimate applications proceed while re-freezing restores full fraud protections after. Here‘s how to lift and lower credit freezes:

Determine which bureau(s) the creditor uses – You can just lift the freeze for the specific bureau needed if this can be determined.
Contact the bureaus online/phone – Provide identifying info and the PIN/password for each freeze you are lifting.
Ask for a specific duration – Request the timeframe you need the freeze lifted, typically 1 week for a single application.
Check applications proceeded – Confirm with the creditor that they were able to access your credit report after the lift.
Re-freeze credit – Replace the credit freeze at each bureau once applications are finalized.

With some planning, you can minimize the time your credit is accessible when applying while keeping it locked down most of the time. Just schedule lead time for thawing before applying.

What If You‘ve Already Been Victimized by Identity Theft?

If you discover you have already been the subject of identity theft account fraud, take these important steps:

Get an extended fraud alert – Request an extended 7-year fraud alert at each bureau for added protections.
Investigate compromised accounts – Pull official copies of your credit reports and identify any accounts opened fraudulently.
Report the identity theft – File an FTC identity theft report and submit to creditors. Provide a police report too.
Dispute fraudulent accounts – Work with creditors‘ fraud departments to dispute unauthorized accounts and have them removed.
Monitor accounts closely for signs of further identity theft. Utilize credit monitoring services or software for added alerts of any suspicious activity.

Helpful Resources for Identity Theft Victims

Dealing with identity theft can be complex and stressful. Make use of these helpful resources:

IdentityTheft.gov – The official government one-stop resource for ID theft victims. Guides filing reports and restoration.
FTC Identity Theft Hotline (1-877-438-4338) – Talk to counselors for personalized help with identity theft response and protections.
Identity Theft Resource Center – Excellent source for guides, tools and help for ID theft and security breaches.
Credit monitoring services – Paid services like Lifelock and IdentityForce provide extra alerts and help with resolution.
Credit bureau fraud departments – Equifax, Experian and TransUnion all have dedicated teams to assist fraud victims.

You don‘t have to tackle the recovery process alone – take advantage of the many free resources available.

The Takeaway: Consider Freezing Your Credit

Freezing your credit limits access to your credit reports and can effectively halt identity thieves from opening fraudulent accounts in your name. While not without some inconveniences, having to "thaw" your credit when legitimately needing access, the security benefits often make it worthwhile for those at risk of ID theft.

Carefully weigh the pros and cons, but don‘t rule out this powerful preventative measure. Used proactively, credit freezes can stop you from becoming the next victim of the thriving identity theft problem.

About the Author

Jason Striegel is a long-time identity theft prevention advocate and editor for the blog CreditChow. A security expert, Jason enjoys advising readers on best practices for fraud avoidance and credit reputation management. He aims to help consumers protect their information, accounts and identities through practical tips and guidance.