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What to Know About Freezing Your Credit

Updated: Oct 13, 2023

A credit freeze, also known as a security freeze, is a vital tool for protecting your identity and securing your financial health. With the rise of digital transactions and subsequent increase in data breaches, understanding this measure is now more important than ever.

What Freezing Your Credit Means

Freezing your credit involves restricting access to your credit report. This step is essential because most creditors need to see your credit report before they approve a new account. If potential lenders or creditors can't access your report due to a freeze, it's highly unlikely they would extend credit, thus preventing fraudsters from opening new accounts in your name. A credit freeze does not affect your credit score or prevent you from getting your free annual credit report. It also does not prevent you from applying for a job, renting a home, or buying insurance. It merely provides a shield against the opening of new credit lines or loans under your identity.

Why You Should Freeze Your Credit

The primary reason to freeze your credit is to protect yourself from identity theft and fraud. Strange credit report activity, such as unfamiliar accounts, can indicate stolen identity. A credit freeze is a proactive measure that can prevent such fraudulent activity.

Freezing your credit is particularly important if you have been notified of a data breach, if your wallet, Social Security card, or other personal, financial or account information has been lost or stolen, or if you notice unauthorized transactions on your bank account or credit card. Moreover, it's a crucial step in protecting your financial well-being and maintaining peace of mind. It ensures you have control over who can access your credit report, hence reducing the risk of unauthorized credit activities.

How to Freeze Your Credit

To freeze your credit, you need to contact the three major credit bureaus: Equifax, Experian, and TransUnion. You can do this online, over the phone, or by mail. You'll need to supply your name, address, date of birth, social security number and other personal information. Each bureau will provide a unique personal identification number (PIN) or password that you will use to lift the freeze in the future, so be sure to store this information in a safe place. As of September 2018, it's free to freeze and unfreeze your credit with all three bureaus.

Remember, a credit freeze isn't a one-and-done deal. When you're ready to apply for new credit, you'll need to temporarily lift the freeze. You can do this using the PIN provided at the time of the initial freeze, and you can do it for a specific period or for a specific party, like a potential landlord or lender.

Taking a proactive approach to protect your financial identity is a fundamental aspect of sound financial planning. A credit freeze can be an effective tool for preventing identity theft and ensuring your credit history remains truly yours.

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