Knowing when to freeze your credit

Growing concern about identity theft and data breaches has many people looking for ways to protect their financial information. Credit freezes, also known as security freezes, are one way to lock down your credit report and prevent fraudsters from opening accounts in your name.

What is a credit freeze?

By preventing almost anyone responding to a credit application from looking at your credit report without your permission, a credit freeze makes it all but impossible for identity thieves to open new credit accounts in your name. This is because most creditors require access to your financial data before issuing credit. (Your current creditors, government agencies and debt collectors can still access your data.) A freeze doesn’t affect your credit score or prevent you from accessing your own credit report. Your accounts remain open, so you need to keep monitoring your bank and credit accounts for signs of fraud.

How to freeze your credit

To place a credit freeze, contact all three major credit reporting agencies (TransUnion, Experian and Equifax). Placing a freeze costs you about $10 per bureau (fees vary from state to state), unless you’ve been a victim of credit fraud and have the police report to prove it.

Tip: If you want to protect your credit but don’t want to place a freeze, you can issue a fraud alert for free. A fraud alert doesn’t prevent creditors from accessing your credit report, but it tells them to verify your identity before issuing credit.

Lifting the freeze

Each credit bureau provides you with a PIN so you can authorize the release of your credit report when necessary. You can lift a freeze temporarily for a specific transaction by giving the creditor the PIN along with your application for credit, employment or housing. Be sure to explain that this PIN is required in order to access your credit report.

You can also lift the freeze for a specific time period by contacting the credit reporting agencies. But be careful: Depending on state law, you may be charged a fee each time your freeze is lifted. To end your freeze permanently you need to submit a request to the three credit bureaus. In many states, the freeze remains until you request to remove it, but some states remove the freeze automatically after seven years.

Who should use a credit freeze?

Confirmed victims of identity theft are the best candidates for a credit freeze. If your identity hasn’t been stolen but your information has been compromised—for example, if you lost your wallet—you also may want to consider a credit freeze, possibly in conjunction with a fraud alert.

Also keep in mind whether your credit will be checked soon—maybe because you plan to buy a house or a car, or apply for a new job. If so, the fees for lifting your freeze can add up. If you expect to apply for credit or other services frequently, a fraud alert might be a better approach.

While credit freezes may bring some fees and inconveniences, their benefits can be valuable if your credit is at risk. If you’ve misplaced your Bank of America debit card, you can use the Mobile Banking app to temporarily lock your card, helping to prevent unauthorized transactions.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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