Benefits & Drawbacks of Freezing Your Credit

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Ice Cubes

Ice CubesThe ability to freeze your credit used to be a service that was only offered to those who had been victims of identity theft. In recent years, however, all three credit bureaus have allowed people to freeze their credit, even if they aren’t victims of identity theft.

When you freeze your credit, you essentially tell the credit bureau to lock it down. No one has access to your credit report or score–not even you–unless you put in a request to have your credit thawed. Freezing your credit just means that no inquiries can be made on your account, and no new lines of credit can be open. However, you CAN use the lines of credit you already have open; freezing your credit has no effect on your current credit usage.

Benefits of Freezing Your Credit

There is no safer way to protect your credit from thieves. If you happen to use your credit card at a store that you later find out had a credit breach, the thieves may have your credit information, but they won’t be able to open any new credit in your name because your credit report is frozen. They simply will be denied when they try to open new credit.

Unlike a credit monitoring service, when you freeze your credit, you don’t have to pay a monthly or yearly fee. Besides, credit monitoring services usually discover that your credit has been compromised after the fact. When you freeze your credit, your credit can’t be stolen.

Drawbacks of Freezing Your Credit

Freezing your credit can be inconvenient. If you’d like to open a new line of credit or apply for a car or home loan or even rent an apartment, you can’t do so spontaneously. Instead, you’ll need to use a special pin number to thaw your credit that the credit bureau gave you when you placed the initial freeze. You’ll also need to pay a small fee.

Once you thaw your credit online or over the phone, it’s generally available for a credit check immediately. However, some people may not like taking this extra step. (In that case, a credit monitoring service may be a better option for you than freezing your credit.)

Also, how much you need to pay to thaw your credit depends on the state you’re in. (The price ranges from $2 to $10.) If you’re simply applying for a new credit card, you can thaw your credit for the credit bureau the company uses for credit checks. If you’re applying for a home loan, though, you’ll need to thaw your credit for each bureau and may have to pay $30 total out of pocket to do so.

My husband and I have had our credit frozen since 2009 when we experienced a minor credit theft. Though thawing our credit when we need to can be a bit inconvenient, we both happily accept that inconvenience to keep our credit safe.