Credit freeze: What? Why? How?
What is a credit reporting agency?
A credit reporting agency, also known as a credit bureau, is a private company that collects and maintains consumer credit information, generates credit reports and scores to assess the creditworthiness of individuals and businesses.
Credit reporting agencies play a crucial role in the financial system:
- Function — Credit reporting agencies compile and manage information from lenders to create credit reports, which help lenders make informed lending decisions.
- Major agencies — The three primary credit reporting agencies in the U.S. are Experian, TransUnion, and Equifax, each maintaining extensive databases of credit information.
- Consumer impact — Credit reports generated by these agencies influence loan approvals, interest rates, and even employment opportunities, as they reflect an individual's credit history and behavior.
- Legal framework — The Fair Credit Reporting Act regulates how credit reporting agencies operate, ensuring consumer rights and accuracy in reporting.
What is your credit report used for?
Lenders use these reports to help them decide if they will loan you money, and what interest rates they will offer you. Lenders also use your credit report to determine whether you continue to meet the terms of an existing credit account. Other businesses might use your credit reports to determine whether to offer you insurance; rent a house or apartment to you; provide you with cable TV, internet, utility, or cell phone service. If you agree to let an employer look at your credit report, it may also be used to make employment decisions about you.
What is a credit freeze?
A credit freeze is a way for you to restrict access to your credit file. A credit freeze is a preventative action that empowers you to control who can view your credit report, making it difficult for identity thieves to open accounts in your name. However, you should be aware that using a credit (or security) freeze to control access to the personal and financial information in your credit report may delay, interfere with, or prohibit the timely approval of any request or application you make regarding a new loan, credit, mortgage or any other account involving the extension of credit.
Why freeze your credit report?
A credit freeze is perhaps one of the most important preventative actions that you can take to protect yourself from having identity thieves open credit accounts in your name. Freezes prohibit consumer credit reporting agencies from disclosing the contents of your credit report to any person requesting the information contained in the report. Without that credit file, lenders generally will not extend credit to you — or to anyone else claiming to be you.
How do you set up a credit freeze?
Setting up a credit freeze is something you do yourself by contacting the major credit bureaus (Equifax, Experian, TransUnion). There is no cost to place or lift a credit freeze.
| Credit bureau | Online access | Phone number | Mailing address |
|---|---|---|---|
| Experian | Experian Freeze Center | 888-397-3742 | Experian Security Freeze P.O. Box 9554 Allen, TX 75013 |
| TransUnion | TransUnion Service Center | 800-916-8800 | TransUnion P.O. Box 160 Woodlyn, PA 19094 |
| Equifax | myEquifax account | 888-298-0045 | Equifax P.O. Box 105788 Atlanta, GA 30348 |
Duration and management of a credit freeze
A credit freeze remains in place until you decide to lift it.
How do you lift a credit freeze?
To lift a credit freeze, you must contact each of the credit reporting agencies individually. There is no cost to remove a credit freeze.
What are some of the limitations of a credit freeze?
Freezing your credit report (also known as placing a security freeze) is becoming increasingly important. With nearly all of our financial and personal information living on “the cloud,” we are all increasingly vulnerable to fraud, hacks and identity theft.
The fact that three of the largest credit reporting agencies (TransUnion in 2022, Equifax in 2017 and Experian in 2013, 2014, 2017) suffered security breaches serves as a warning. The theft of Social Security numbers and other personal details suggests that someone out there might have all the information they need to steal your identity. To be clear, credit freezes won’t protect you from someone stealing your identity, but they will make it more difficult for them to use your stolen identity to open fraudulent credit accounts in your name.