If you’re thinking about freezing your credit, have been advised to do so, or are simply looking to better understand what it is, Build can help. This blog aims to inform readers of the intricacies of credit freezing, including how it works, what happens when you freeze your credit, reasons to freeze, and extra details that help give the process more context.

If you fear your identity has been compromised, know that your information was stolen, or want to take preventative measures to help keep your personal and financial information secure, consider a credit freeze. All you have to do is discuss setting up a credit freeze with the main three credit bureaus, TransUnion, Experian, and Equifax. Let’s look at more details surrounding credit freezes to thaw out some of the mysteries surrounding this icy security measure.

What Happens When You Freeze Your Credit? 

After contacting TransUnion, Experian, and Equifax, a few things will occur when you’ve frozen your credit, which will help keep your personal and financial information safe and secure. The primary thing that occurs is your credit report goes on “lockdown,” disabling the ability to open new credit accounts.^[1] Secondarily, your report is inaccessible to new inquirers, whether from credit companies, new banks, or other interested parties. Your credit report is then only viewable by agencies or companies that have already been approved for access before the freeze; these are typically creditors you’re already working with, government agencies, and credit monitoring services you’ve hired for help.^[2] Essentially, a freeze throws an impenetrable barrier around your credit report that works both ways: it can’t be used for new inquiries, and other companies can’t view it for any reason (outside of the aforementioned exceptions). This is why the process is called a “freeze.”

Reasons to Freeze Your Credit

You may be wondering why you would ever need to consider a freeze or know that you should but are wondering about the consequences before following through. There are a handful of reasons people decide to freeze their credit, from security crises to good practices. Let’s go over a few key reasons to freeze your credit below:

• Identity Theft: If you know your personal information and financial data have been compromised or stolen, it’s always a good idea to freeze your credit. This keeps third parties away from your report and tightens the funnel around finding the issue or breach. Again– if you are a confirmed victim of identity theft, you have 100% reason to freeze your credit until your information and finances are back under your control.
• Suspicious Activity: If you see activity on your credit report that you know for a fact is not in line with your usual or confirmed parties, you may want to consider a freeze until you can pinpoint the activity’s source. Your known creditors, loans, financial/credit monitoring services, and certain government agencies will typically have access to your report. If you see activity that isn’t in line with these groups, freeze your credit and discuss options with your bank, creditors, or credit monitoring service; if things continue to feel suspicious, consider contacting authorities or getting legal consultation.
• Unexplained Notices: If you begin receiving mail or emails for bills, collections notices, or balances due that you don’t recognize, it may be best to consider freezing your credit. This even includes when you start receiving notices for someone else’s name– even if there’s just been a mix-up in data or information, it’s important to freeze your credit while assessing the situation.^[3]
• Extra Security or Plain Curiosity: If you’ve heard of credit freezing and want the added protection of having your credit report frozen, by all means– look into it! If you’re not preparing to apply for new credit or loans and are curious about what freezing your credit will do, there’s no reason to wonder– freezing your credit will only keep your information more secure.

What is the Difference Between a Credit Lock and Credit Freeze?

Aside from a credit freeze, you can also perform what’s known as a “credit lock.” While similar, there are a few differences to consider, and you may find that you prefer a lock over a freeze or vice versa. By knowing the difference between the two, you can better strategize how to gain control of your credit report and stay secure your way.

At this point, we know a decent amount about what a credit freeze is. Once you’ve contacted the “big three” credit bureaus (TransUnion, Experian, Equifax), they’re required to freeze your credit report within 1 business day of the request.^[4] Your report is then inaccessible to any new parties attempting to access your report and can only be seen by agencies or companies you’re already and knowingly working with.

A credit lock is similar in its ability to limit access to your credit report. In fact, the security measures used by a credit lock are virtually identical to those of a credit freeze. The key difference is that a lock can be locked or unlocked anytime, whereas a freeze is more definite. This means credit locks are more temporal, while credit freezes are typically long-term.^[5] 

Each of the three credit bureaus offer different systems, apps, or app features to help you lock or freeze your credit once you’ve decided which strategy you want to use.

Is It Free to Freeze Your Credit?

You’ll be relieved to find out that freezing your credit is completely free.^[6] Moreover, you’ll need to contact all three major credit bureaus to freeze your credit fully– and there’s no cost associated with these service(s) the whole way! While it may take half a day’s worth of phone calls or online requests to freeze your credit, it should take less than 24 hours for your credit to freeze indefinitely.

Does a Credit Freeze Affect Your Score?

To get straight to the point: No, a credit freeze will not impact your score in any way.^[7] Because credit freezes are a security measure and not a consequence of delinquency or misuse, you won’t be punished or dinged. In fact, freezing your credit is a responsible strategy for staying secure, and you may be advised to freeze or lock your credit if you aren’t planning to apply for any new sources of credit anytime soon.

Does a Credit Freeze Prevent Soft Inquiries?

A credit freeze does not prevent soft inquiries^[8]; whether the creditors or lenders you’re already associated with want to perform a soft inquiry or you want to hire a credit monitoring service to help strategize your credit usage, this is all still possible even with a credit freeze. However, a freeze will prevent hard inquiries from outside sources, creditors, or lenders you haven’t worked with.

Does a Credit Freeze Affect Background Checks?

In short, this depends on the type of background check being performed. Some employers require a credit check during the application, interviewing, or onboarding processes. In these instances, your background check will be slowed or halted if your credit is frozen. Because the background check is treated as a new inquiry (unless you’ve used the same service in the past), a freeze can prevent the check from being performed. It’s advised to temporarily unfreeze your credit for a set window of time if you know a credit check will be part of your hiring process; once you’ve been cleared, you can re-freeze your credit and stay secure!^[9]

Summary

The bottom line is that credit freezes affect your credit from a security standpoint but do not impact your score. If you fear you’ve had your information stolen or compromised, go ahead and freeze (or lock) your credit until you’re back in good, healthy, secure standing with your personal info and credit report. Now that you know more about what a credit freeze is, how it works, and when to use it, we hope you’ll move more securely in the world of credit. Best of luck!

Disclaimer: Does Freezing Your Credit Affect Your Score is intended for educational/informational purposes only and is not intended as financial advice.

Sources

1. What to Know About Credit Freezes and Fraud Alerts
   https://consumer.ftc.gov/articles/what-know-about-credit-freezes-fraud-alerts
   Accessed April, 6 2023
2. What does it mean to put a security freeze on my credit report?
   https://www.consumerfinance.gov/ask-cfpb/what-does-it-mean-to-put-a-security-freeze-on-my-credit-report-en-1341/
   Accessed April 6, 2023
3. How to Freeze Your Credit
   https://www.hscwealthadvisors.com/how-to-freeze-your-credit/
   Accessed April 6, 2023
4. What does it mean to put a security freeze on my credit report?https://www.consumerfinance.gov/ask-cfpb/what-does-it-mean-to-put-a-security-freeze-on-my-credit-report-en-1341/
   Accessed May 8, 2023

5. What’s the Difference Between a Credit Freeze and a Credit Lock?
   https://www.experian.com/blogs/ask-experian/whats-the-difference-between-credit-freeze-and-a-credit-lock/
   Accessed April 6, 2023
6. Credit Freeze
   https://www.transunion.com/credit-freeze
   Accessed April 6, 2023
7. The Pros and Cons of Freezing Your Credit
   https://www.forbes.com/advisor/credit-score/pros-and-cons-of-freezing-credit/
   Accessed April 6, 2023
8. How Do I Freeze All 3 Credit Bureaus?
   https://biosidmartin.com/how-do-i-freeze-all-3-credit-bureaus/
   Accessed April 6, 2023

9. Does a Credit Freeze Affect Background Checks?
   https://www.goodhire.com/resources/articles/does-a-credit-freeze-affect-employee-background-checks/
   Accessed April 6, 2023