Credit Card Freeze And Its Effect On Your Credit Score

Credit Card Freeze And Its Effect On Your Credit Score.

Credit Card Freeze:  In this hyper-connected world, it is not surprising to see that identity theft has increased significantly over the last several years. According to research, an estimated 16.7 million individuals had fallen prey to cyber criminals in 2017 only.

Credit Card Freeze And Its Effect On Your Credit Score

There are lots of ways to safeguard your personal information in this era of technology, which includes having strong passwords, reducing the use of public Wi-Fi, and keeping an eye on your credit reports. Moreover, placing a credit freeze on your credit profiles through the three major credit reporting agencies can be a very helpful act in the fight against identity theft.

Although taking the steps to put a credit freeze in place is a smart way to keep criminals from opening new accounts in your name or accessing your credit report for another reason, you might ask if a credit freeze affects your credit score? The answer is NO but there are lots more to know.

What is a Credit Freeze?

A credit freeze, which is also called a security freeze, is a way of locking off your credit reports, which makes it almost impossible for criminals to open new accounts in your name.

This means that no one, not even you, can apply for new credit while the freeze is in place. Lenders and other new creditors will have to review your credit report before approving a new account, and this cannot happen when you have a credit freeze on your reports.

Unless you verify this information, a new credit line, mortgage, auto loan, or other credit accounts will not be established.

Does Freezing Your Credit Hurt Your Credit Score?

A credit freeze does not have an effect on your credit score. However, it limits access to your credit report so that new accounts cannot be created in your name. Having a credit freeze in place will not limit access to your own credit report.

It is pertinent to note that identity thieves may still have an opportunity to make fraudulent charges to your current accounts. Therefore, you should continue to monitor account activities over time.

While a credit freeze is helpful against identity theft, a freeze can cause other issues. Before you apply for a new credit account, you will have to unfreeze your credit report.

What a credit freeze won’t do

There are some other important things that won’t happen if you freeze your credit, according to the Federal Trade Commission:

  • Freezing your credit won’t stop you from getting your free annual credit report
  • It won’t stop you from opening new accounts yourself, applying for a new job, renting an apartment, or getting insurance. However, to do any of these things you’ll need to temporarily remove the freeze and put it again when you’re done accessing your credit. This is usually free.
  • Freezing your credit won’t stop criminals from accessing your existing accounts, so you will need to continue to check your statements for fraudulent activity.
  • It won’t automatically stop you from receiving pre-screened credit offers.

Pros of a credit freeze

It will prevent opening new lines of credit

No one will be able to open a new line of credit or new accounts that require a credit check in your name. If a fraudster tries to open a new credit line, they will be blocked. That’s because lenders check your credit file to see if you’re a good credit risk and if you’ll pay back the loan. A credit freeze prevents lenders from checking your credit file history.

Pros of a credit freeze

It protects you against some types of identity fraud

If you’ve been a victim of identity theft and you placed a freeze on your credit, you might still experience fewer instances of attempted fraud involving your personal information. Because identity thieves will be unable to open new lines of credit in your name, although they may be able to misuse your existing accounts if they ever gain access to them.

Doesn’t affect your credit score

Freezing your credit will not affect your credit score.

It is free

Freezing or unfreezing your credit files is absolutely free.

Credit Freeze Cons

Here are some disadvantages of placing a freeze on your credit files.

It takes some effort

It usually requires some effort to place or lift a credit freeze. For example, you will have to contact all three credit bureaus.

It requires keeping track of your PINs

You may lose track of or even forget your personal identification numbers to lift and freeze your reports. When you want to lift or freeze your credit reports, you are usually asked to provide your PIN. If you forget or lose your PIN, you will have to get a new one.

You will need to lift a freeze to give creditors access to your credit file

When you need to open a new line of credit — for Example, if you apply for a new credit card — you will have to lift the freeze to give the creditor access to your file.

It doesn’t prevent thieves from accessing your already existing accounts

A credit freeze can only help prevent identity thieves from opening a new account in your name, but it doesn’t stop them from making fraudulent acts on your existing accounts.

The Bottom Line

Credit Freeze bottom line

Freezing your account is a great way to control it against identity theft and against new accounts being opened in your name without your knowledge.

Also, know that a credit freeze does not totally protect accounts you already opened, so keep checking your statements and account activity over time.

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