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Should I Freeze My Credit? Here’s Why and How You Can Thumbnail

Should I Freeze My Credit? Here’s Why and How You Can

By Angela Dorsey

Credit accounts are particularly vulnerable to data breaches, phishing, doxxing, and other forms of cyber-fraud. While authorities continue to grapple with those crimes, credit account holders have a line of defense to prevent compounding criminal acts, leading consumers to ask themselves, “Should I freeze my credit?”

Credit freezing is similar to credit locking in many ways. However, there are substantive differences between the two strategies in managing and repelling credit-based fraud.

What Is Credit Freezing?

When you freeze your credit, no parties other than yourself can readily access information about your account. The restricted information includes your Social Security ID, name, address, birth date, and credit history. A credit freeze shuts out banks and credit companies from obtaining that info, along with anyone else who wants to usurp your information for fraudulent activities.

Credit Freezing vs. Credit Locking

You may be Googling, “Should I freeze my credit or lock my credit?” Similar to credit freezing, credit locking restricts access to your credit information. Locks are generally issued by credit reporting companies—such as Equifax and Experian—upon the account holder’s request.

Credit locking can be more convenient to users since lock administration is in the hands of the company. With lock administration, you’re using the company’s resources and tools to lock the account up. 

Since they still have access to your account information, the credit bureau can issue real-time alerts about possible fraudulent activity on your credit account. They might offer additional features, like credit monitoring and safeguarding against identity theft.

However, credit locking comes with some limitations. Your credit information is still accessible to the bureau that issued the lock. Although ending the freeze is fairly simple and can take effect immediately, users may well pay for the convenience with a monthly fee. 

Steps to Take to Freeze Your Credit

A credit freeze is a little more work-intensive on your part and might take a little longer to complete. But it can be well worth the effort.

To freeze a credit account, the credit holder contacts all three credit bureaus (Experian, Equifax, and TransUnion) and requests the freeze. They generally issue the freeze to take effect within about five business days, whereas credit locks can usually be enacted immediately.

One of the biggest differences between freezes and locks is how you lift a freeze. The bureaus issue a unique PIN, with which you can easily halt the freeze temporarily if you need to apply for more credit. This gives you complete control over the frozen assets.

In addition, obtaining a credit freeze costs you nothing, unlike most locks that charge up-front fees. Also, credit freezes are supported and regulated by federal and state laws under the Fair Credit Reporting Act

Regulators establish a framework with standards for safeguarding user privacy and information. Credit locks are not overseen by governmental agencies, but, rather, by the bureaus themselves. 

Pros and Cons of Credit Freezing

Are you wondering, “Should I freeze my credit?” There are a few advantages and possible drawbacks to a credit freeze that you should consider.

Advantages of freezing your credit include:

  • Total protection against new incidents of credit fraud
  • No administrative charges or fees
  • No impact on your credit score

The freeze can also last indefinitely until you cancel it.

It’s also important to consider the possible traps of freezing your credit:

  • Can take more time to set up with each bureau
  • Could delay other pending credit applications from approval
  • May not prevent all forms of identity theft, like that used for non-credit reasons
  • You may also have to manage three PINs for all the reporting agencies involved.

Some of these advantages and disadvantages may not matter to your big picture. It’s a wise decision to consult with your financial advisor before deciding.

Should I Freeze My Credit? Ask a Professional

The Dorsey Wealth Management team helps our clients answer the question “Should I freeze my credit?” Beyond that, our ultimate goal is to help them make smart decisions about their money so they can retire to a life they love!

Whether you’re a current client or a prospective one, schedule a free introductory 30-minute phone call. You can reach us at (310) 370-7776 or angela@dorseywealth.com.

About Angela

Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER™ professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. 

Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.