Using Credit Freeze for Self Defense

[Updated: Sept 2021]

Identity theft is arguably one of the worst things that can happen to a person, financially. When someone steals your identity, they can basically do anything you can do – including obtaining loans or credit cards in your name. And when the spending spree is over, you are left holding the bag. If it’s not bad enough that they’ve taken your money and left you with a huge bill, it may also have a major negative impact on your credit report. It can be very difficult and time consuming to undo all this damage.

In order to open a new loan or credit card in your name, the criminals have to pass a credit check through one of the big three credit bureaus: Experian, Trans-Union and Equifax. (UPDATE: There’s a fourth one now: Innovis.) Therefore, if you can somehow stop the credit check from passing, you can prevent the bad guys from getting a new line of credit in your name.

The easiest way to do that is to “freeze” your credit – basically you tell the credit bureaus to put a halt on all credit checks until you tell them otherwise. This obviously only works if you yourself don’t need to have your credit checked. If you’re about to get another credit card (including store cards) or need to finance something (car, house, appliances, etc), then you’re going to need to run a credit check. Also, some other activities will trigger a credit check, such as background checks, opening a new financial account, or even signing up for a new utility (cable, for example).

Freezing your credit has absolutely no impact on your credit score, and there is now no fee to freeze or thaw your report. You have to do it individually with each of the three credit companies.

Basically, if you rarely if ever need to open new lines of credit, you should go ahead and put a freeze on your credit. It does no harm and can save you a ton of heartache. I recommend reading this Clark Howard article. It has all the details on how to freeze your credit with each of the three credit companies.

If you’d like more info on credit freezes, check out this Federal Trade Commission web site.

If you’d like to stop getting “pre-screened” and “pre-qualified” credit card offers in the mail (which can sometimes be stolen and used to open credit in your name), see this FTC web site. It will tell you how to opt out. It’s a bit of a pain, but well worth it.