Why Freezing Your Credit for Free Could Be a Mistake

Frozen dollar
Photo by Svetlana Turchenick / Shutterstock.com

Protecting yourself from identity theft in an era of data breach after data breach is about to become a little cheaper.

Starting Sept. 21, consumers nationwide will be able to place and lift credit freezes for free under federal law. Up until now, credit-reporting agencies — which maintain consumers’ credit histories — have been able to charge to put a freeze on your credit report in many states.

This change is part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, an expansive piece of financial legislation adopted in May.

A credit freeze is not a panacea for financial fraud, however, and it has other drawbacks. So, it’s critical that you understand how freezes work before requesting one.

What is a credit freeze?

A credit freeze, also known as a security freeze, blocks access to your credit reports — and remains in effect until you remove the freeze.

If you freeze your credit, credit-reporting agencies cannot release information from your credit reports without your permission. As the new law explains:

“The security freeze is designed to prevent credit, loans, and services from being approved in your name without your consent.”

This is why freezing your credit with all three major nationwide credit-reporting agencies — Equifax, Experian and TransUnion — is generally considered the strongest protection against identity fraud.

Credit freezes aren’t for everyone

If you suspect someone has stolen your identity or otherwise have reason to believe you are at a higher risk of becoming a victim of identity fraud, a credit freeze should arguably be your first preventive step.

For example, experts widely recommended credit freezes to folks who learned last year that their personal information was stolen in the Equifax hack.

The trouble with a credit freeze is that it can even prevent you from opening accounts or taking out loans in your own name. So, if you do not believe you are at a higher risk of identity fraud and you plan to pursue new credit or a loan in the near future, you may want to think twice about freezing your credit right now — even after you can do so for free.

The Washington Post recently reported that some mortgage lenders say it can be more challenging to deal with consumers who have frozen their credit. Lenders generally need to access your credit information a couple of times during the mortgage process, and if you fail to lift a credit freeze at the right time, it can delay processing of your loan.

The Post report explains:

“Bottom line: If you opt for free freezes and plan to get a mortgage, play it smart: Be ready to unfreeze your credit files at least twice during the process, or simply unfreeze for the duration.”

To freeze or unfreeze your credit, you must request the action from each of the three major credit reporting companies. You can generally do this through their websites or by phone or mail — but it may not happen overnight.

For example, under the new law that makes credit freezes free, credit-reporting agencies get up to three business days from when they receive a freeze request from a consumer to enact the freeze.

A credit freeze is not complete protection

Freezing your credit will not protect you from all types of identity theft. A criminal who has stolen your personal information could still use it to commit medical identity theft or tax fraud, for example.

So, it’s critical that you don’t let frozen credit give you a false sense of security. You need to take other steps to protect yourself as much as possible. We detail those steps in “Why Freezing Your Credit Won’t Fully Protect You After the Equifax Breach.”

How do you feel about credit freezes becoming free? Share your thoughts below or over on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Secret Ways to Save on Netflix
Secret Ways to Save on Netflix

These little-known savings tactics can help whittle down what you pay for your streaming video subscription — every month.

8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

12 Ways to Maximize Your Social Security Checks
12 Ways to Maximize Your Social Security Checks

You may be eligible for more retirement income than you realize.

20 Generic Brands That Amazon Created
20 Generic Brands That Amazon Created

Amazon’s growing collection of private brands offers everything from toilet paper and coffee to motor oil and clothing.

3 Ways to Get Paid for Searching the Web
3 Ways to Get Paid for Searching the Web

If you’re already doing it anyway, why not get rewarded for it? Here are three great opportunities.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Whether you resell it for a big profit or add it to your own wardrobe, this type of clothing is a hidden steal.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

This Is America’s New Favorite Grocery Store
This Is America’s New Favorite Grocery Store

Consumers say a familiar name has become their go-to source of grocery items.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Does Wearing 2 Masks Protect You Better From COVID-19?
Does Wearing 2 Masks Protect You Better From COVID-19?

A growing number of people are wearing two masks instead of just one. Should you join them?

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

Prepare to Pay More for These 31 Drugs in 2021
Prepare to Pay More for These 31 Drugs in 2021

More than 700 prescription medications have seen price hikes so far this year. Here’s a look at the worst.

The 10 Golden Rules of Becoming a Millionaire
The 10 Golden Rules of Becoming a Millionaire

I’m a millionaire several times over. I got here the same way you can — by following these simple steps.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.