The Benefits of Freezing Your Credit

Protect your finances

Identity theft and data security breaches are increasingly common across the globe and can cause major issues in your business and personal affairs. One commonly recommended financial preparedness practice – freezing your credit – is a relatively easy way to prevent this from happening to you and your loved ones.

Still, many people aren’t aware of this option or how to go about it. In this article, we look at what it means to freeze your credit, how to do it and why it is important.

What is a credit freeze?

Contrary to what you might think, credit freezing has no impact on your ability to use existing credit accounts or credit cards. Instead, freezing your credit prevents any new credit accounts from being opened in your name without your knowledge. This important safeguard against identity theft and fraud can be particularly useful if you aren’t in the habit of regularly checking your credit or your children’s credit.

When you do want to open a new account, you can simply lift the credit freeze temporarily while you open a new credit account. Once you are done, the credit freeze can automatically resume.

How do I freeze my credit?

To freeze your credit, you will need to contact each of the three credit agencies: Experian, Equifax and TransUnion. Each agency has an online page where you can initiate a credit freeze. Keep in mind you will need to activate a credit freeze with each agency individually. There is no cost to freeze your credit.

When setting up your credit freeze, you will create a pin number. This pin enables you to temporarily unfreeze your credit if you need to open a new credit account or give an agency access to your credit report (e.g. for a new loan, credit card or background check).

For children under the age of 16, a credit freeze has to be requested by mail, as additional printed documents must be submitted.

Each of the three credit agency’s websites contains more information about this topic. We encourage you to take the time to familiarize yourself with the process.

Your identity will thank you!

#moneymanagement #financial planning #financial preparedness #creditscore

Author

Nicki Parr

Date

Updated July 1, 2022