What are Credit Freezes?

Let us begin with what a credit freeze is not: it is not something that alerts creditors to possible fraud on your credit report (this is a “fraud alert”), and it is not something that prevents you from using credit. Rather, it is an action that consumers may take to prevent new lenders, insurers, or anyone else from pulling their credit reports or scores.

Individuals sometimes put security freezes on their credit reports in order to protect against identity theft. By alerting the credit bureaus to take such action, consumers block others from fraudulently taking out new credit under their names. With the freeze in place, creditors cannot obtain the reports, and therefore will not extend new credit to the individuals who request it.

The difference between a credit freeze and fraud alert is that the credit freeze disallows new creditors from pulling one’s report in the first place, while with a fraud alert the report can be pulled -- it just will contain a statement of suspected fraud and ask that the lender require additional verification before extending credit to someone. Another difference between the two is that anyone may request a fraud alert on his or her report, but credit freezes are allowed only in certain states.

The follow states either allow credit freezes for all consumers presently, or will begin to allow them within the next few months:

California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Illinois
Indiana
Kentucky
Louisiana
Maine
Maryland
Minnesota
Montana
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Oklahoma
Pennsylvania
Rhode Island
Utah
Vermont
West Virginia
Wisconsin
Wyoming

The following states allow credit freezes only for identity theft victims:

Arkansas
Hawaii
Kansas
Mississippi
South Dakota
Texas
Washington


Freezing your Reports

If you are eligible and would like to put a credit freeze on your reports, then you must state this, in writing, to each of the three main consumer credit reporting agencies – Experian, Equifax, and TransUnion. While each agency has slightly different requirements, in general you should send a letter certified that includes: your name, your current and former addresses, your social security number and your birth date.

If you have been a victim of identity theft, then there is no charge to put a freeze on your accounts. Simply include a copy of the police report with each of your letters. If you have not been an identity theft victim, then the present cost is $10 to put a freeze on your report at each agency. Include payment with your letters.

If you would like to apply for new credit (or for an apartment or job for that matter) while you have a security freeze, then you will need to request that the freeze be lifted a few days ahead of time. Find out from the creditor which credit bureau will be utilized to obtain your report, and give them up to three business days for the “thawing” of the freeze to take affect.

There is no way for a new creditor to pull your frozen report unless you formally request that the freeze be lifted. You cannot give permission to someone to bypass the freeze. If the lift that you request is temporary, then your account can remain in that state for 3 to 30 days.

If you would like the freeze lifted completely, then you must request this with each agency that has a freeze on your report, with your personally identifying information and PIN# as evidence of your identity. Once the freeze has been removed, there will be no evidence on your report that the freeze ever existed.

What a Freeze Does Not Do

Having a freeze on your credit report does not affect your personal ability to obtain copies of your report, nor does it prevent your current creditors must pulling your report.

Freezing your report does not make you ineligible to receive prescreened credit and insurance offers, as is the case with a fraud alert. If you wish to opt out of receiving unsolicited credit offers in the mail, you may do so at www.opoutprescreen.com.

During a security freeze, your credit report does not remain unchanged. Your reports will continue to be updated by your current creditors just as they would be otherwise. Freezing your report so that it remains “as is” would not be helpful in preventing fraud at all. So keep up on those payments!

Most importantly, despite the great job that it does, a credit freeze cannot guarantee that you will not be a victim of identity theft. If someone who has assumed your identity applies for credit with a lender that does not check credit reports, then the freeze will not be useful in this situation. Even if you have a freeze on your credit reports, protect your finances and identity elsewhere to maintain your safety to the best of your ability.