Q & A - Questions and Answers

What is a Credit Freeze?

A credit freeze is much more effective in protecting your credit than a fraud alert because it completely blocks your credit report. It allows no one, not even you, to open a credit account in your name. It also denies lenders, insurers, and employers access to your file to complete background checks. However, like a fraud alert, lenders you currently have accounts with still have access to your credit report under a freeze and you can continue to use those accounts.

Lenders don't have a choice to ignore a credit freeze like they do a fraud alert. When a credit freeze is in place and a lender tries to view your reports as part of the application process, they will only get a code saying your report is frozen.

Even though a credit freeze provides more protection, there are some downsides to this option. In order to activate a credit freeze you have to send a letter via certified mail that contains several pieces of identifying information and two proofs of residence.

If you need to apply for credit, you can have the freeze lifted, but you may need to wait; up to 10 days in some cases. Different states have various time regulations to honor your request. You will also need to give the bureaus a specially issued personal identification number. This puts an end to 'instant credit'; you'll actually have to plan ahead if you want to open an account (which, for most of us, is not such a bad thing).

Another downside to credit freezes is they are not free. Each bureau charges $10 to $12 to freeze your credit, for a total cost or $30 to $36. If you are a victim of identity theft your fees could be waived. Some states also waive fees for senior citizens. Lifting and reinstating the freeze may also cost money. In several states, you'll pay $10 to each bureau for a general credit-report thaw, or $12 per bureau to thaw your report for a single lender. Fees can also be assessed for removing the freeze completely or for re-issuing a PIN if you forget it. The bureaus make credit freezes more costly and difficult to obtain compared to fraud alerts because freezes impede the process of collecting and selling credit information about you, which means less money for them.

Unlike a fraud alert that expires after 90 days, a credit freeze remains active until you lift it, with the exception of South Dakota where a credit freeze will expire in seven years.

Suggestions: