Is freezing your credit card really a good idea? In this article we explain the pros and cons of freezing credit and every other things you should know about doing a credit freeze.
Afraid of a data breach or someone stealing your identity and then using it to create a new account that will be used for fraudulent activities? A credit freeze is one of the ways you can stop identity theft and secure your credit reports.
However, it has advantages and disadvantages that you need to know before requesting for your credit to be freezed. There are more options or alternatives to a credit freeze but which one you should you do? Let’s dive right in.
What Are The Pros and Cons of Freezing Credit?
Before you have your credit frozen, you need to know that there are pros and cons of freezing your credit.
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Pros of Freezing Your Credit
What are the advantages of freezing your credit?
- It is Free: You don’t need to pay for either freezing or unfreezing of your credit. It wasn’t free in the past, but now it is totally free.
- Your Credit Score is Not Affected: Doing a credit freeze won’t have any effect on your credit score at all. However, this does not imply that factors such as your level of debt, payment history, credit utilization won’t affect your credit score.
- It gives you peace of mind: At least you won’t have to worry about identity theft or fraud when your credit is frozen.
- It protects you from identity theft: This illegal act is so much common nowadays, freezing your credit can decrease the ability for someone to steal your identity or create a fraudulent credit account using your name. If you have been a victim of identity theft, then you will understand why you need to secure your credit.
- It prevents you from applying for a new credit card.
- Your credit report will not be shared with creditors without your knowledge. You also can access your free credit reports.
- Freezing your credit is permanent until you unfreeze it. Is it really hard to unfreeze your credit? find out below.
- Very easy to do: Setting up a freeze for your credit is very easy. You will provide information such as your address, name, birth date and social security number, asked some questions to verify your identity then you can create your Personal Identification Number (PIN).
Cons of Freezing Your Credit
There is nothing that has advantages that won’t posses any disadvantages. So what are the disadvantages of doing a credit freeze.
- Protection is Limited: Freezing your credit does not prevent someone from making use of your credit card number, hacking your bank account or doing any fraudulent activities that does not need a credit inquiry. You still need to monitor your credit account for any signs of fraud. You need to make sure someone is making use of your credit account because unauthorized purchases can be made even with your credit frozen.
- Requires some effort: You will need to contact all the three major bureaus (Equifax, Experian and Transunion) in order to freeze your credit. It will also take some time before you are able to create accounts with these bureaus because you are going to submit your personal information and social security number.
- Tracking of PINs: Experian requires that you track your Personal Identification Number to freeze and unfreeze your credit. If you lost your PIN, you will have to request for a new one.
- It may not be the best choice for you: If you are really worried about someone creating a new account using your name or you are an identity theft victim, then freezing your credit is the best thing to do. Regularly monitoring your credit reports may be a good idea if you are not so concerned about identity theft.
- Prevents you from applying for new credit opportunities: When you freeze your credit, it is almost impossible to apply for a loan or create a new credit line. For example, getting a job, applying for insurance, etc all needs a credit check which won’t be possible due to your frozen credit. You will need to unfreeze your credit (temporarily or permanently) in order to make it accessible for those companies.
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Is it Better To Freeze or Lock Your Credit?
Of course credit freeze and credit lock are two different things, but which one is better? Both, protects your credit but there are limits and differences.
In terms of cost; credit freeze is totally free at all bureau, while credit lock is only free at Equifax and Transunion while it is free for 30 days then $10/months at Experian. If you don’t want to spend any penny then a credit freeze is the best option for you.
Freezing your credit will help you protect your credit report and keep identity thieves away. You can still gain access to your credit scores and records even after freezing your credit.
A credit lock helps you protect your information but they are not governed by the Federal law.
In conclusion, a credit freeze is better than a credit lock.
How Hard is it to Unfreeze Your Credit?
Unfreezing your credit is not hard at all and it will take between 1 hour and 3 working days for the bureau to unfreeze it according to the Federal Trade Commission, depending on how you made the request (mail, phone call or online).
You only need to contact each of the credit bureau to help you unfreeze your credit. Only Experian credit requires your Personal Identification Number (PIN), while Equifax and Transunion can be done online (you need to sign up for an account).
Experian only offers you a one-time PIN so that it is not exposed carelessly. Just in case you lost your Personal Identification Number (PIN), you can always request for another PIN online. You should also know that you have to options; to either unfreeze your credit permanently or temporarily.
Most people unfreeze their credit temporarily but this depends on you, it’s a matter of choice.
While freezing your credit is a very good way to keep identity thieves away, there are some alternatives to doing a credit freeze. They include but are not limited to:
- Credit lock
A credit freeze at every one of the three significant credit revealing offices can help shield you from numerous types of wholesale fraud. However, credit organizations may suggest a “credit lock” rather than a credit freeze to secure your information. Credit organizations may promote credit locks as being more helpful. In some cases they’re attached to different administrations.
A credit lock isn’t a similar thing as a credit freeze. Credit freezes are represented by laws that secure you. Credit locks are manifestations of the credit revealing offices. A credit lock is attached to an agreement between the credit agency and you. The authority can change the agreement voluntarily. Furthermore, you may not want or need the additional administrations that might be attached to the credit lock.
- Credit Monitoring Services
Credit checking administrations might be useful. They might have the option to advise you regarding suspected data fraud quickly. No credit observing help can forestall all wholesale fraud. Credit observing is an assistance that can be useful, however it is anything but a substitute for credit freezes.
- Fraud Alerts
The credit revealing departments now and then encourage you to put a misrepresentation alert on your credit reports on the off chance that you think you are at risk for data fraud. An extortion alert permits creditors to get a duplicate of your credit report as long as they find a way to check your personality, agreeing the FTC.
What’s the punishment if an organization neglects to get in touch with you before giving somebody credit on the off chance that you have a misrepresentation alert on your credit report? There is no punishment.
In addition, with an extortion alert set up, credit revealing organizations can keep on selling your data. On the off chance that you have a credit freeze set up, they can’t sell your data.
- Identity Theft Protection Service
All in all, a fraud assurance administration gives its clients more than credit observing administrations.
For example, a free credit checking administration may call attention to that there is action on your credit report. Conversely, a wholesale fraud assurance administration may accomplish more by observing for dubious or deceitful movement including your personality through ledgers, criminal databases, and different spots your Social Security number is utilized.
In the event that your personality is taken, a data fraud assurance administration once in a while helps fix the issue. Also, a data fraud assurance administration may alarm you if your own data is spotted on the dull web in light of the fact that a personality hoodlum is selling it.
Main concern? While nothing can ensure you against all types of data fraud, credit freezes can help. What’s more, since they’re free, they won’t negatively affect your credit.