What is a Credit Freeze?

A credit freeze is an option offered to consumers that prevent creditors from viewing your credit report or score. It locks your data at the credit reporting agency and can only be released with your authorization, sometimes referred to as a credit “thaw”. Placing a credit or security freeze with the credit bureaus does not affect your credit score, and remains on file until you request its removal.

While a credit freeze stops potential identity thieves from opening new accounts in your name, companies or agencies that have existing financial accounts with you can continue to access your report – such as companies handling your current credit cards, mortgage or cell phone. There are other organizations that are exempt from the Security or Credit Freeze law, and these exceptions will vary according to state law. Some of the more common exceptions include:

• Certain federal government agencies under the FCRA (Fair Credit Reporting Act)
• Organizations that sell credit reports to consumers
• Credit monitoring companies
• State or local law enforcement agencies including child support agencies and trial courts for warrants or subpoenas
• Collection agencies acting on the behalf of companies with whom you have current accounts

There is no charge to place a credit freeze if you’ve been a victim of identity theft and have filed a report with your local or state law enforcement. For other consumers, the charge for a credit freeze can vary from state to state. For more information about credit freeze fees by state, visit here

http://www.consumersunion.org/campaigns/learn_more/003484indiv.html

A credit freeze must also be filed directly with each of the three credit bureaus: Equifax, Experian and TransUnion. If you’ve been a victim of identity theft, you must submit your request in writing, and include your personal identifying information and a copy of your police report. For non-victims, you can submit a credit or security freeze request online with any of the three credit bureaus.

When Considering a Credit Freeze Plan Ahead

Unless you’re a victim of identity theft, adding a security freeze to your credit report must be considered carefully. One drawback to a credit or security freeze is an individual’s inability to obtain instant credit. In fact, it can impede your job search success, hamper your plans for a mortgage or even interfere with obtaining insurance. If you’re about to make a major financial commitment or career change, you’ll need to plan ahead by requesting a temporarily lift of the security freeze. When requesting a “thaw” to your credit report, you can specify the length of time, a specific category of creditor or maintain the “thaw” until you decide to freeze the report again.

Another important point to remember is that depending upon your state’s Credit Freeze law; it may take credit reporting agencies up to three days to “thaw” your report. In some states, there may be a fee to temporarily unfreeze and refreeze your credit report.