Credit Freeze?

ice-smThere’s a classic strategy to prevent impulsive credit card spending: put the card in a container of water and put it in your freezer. Then you will have to let it thaw before using it, forcing you to stop and think before spending. This strategy, while slightly messy, may have legitimate value for some folks.

There is, however, another kind of credit freeze, in which you can freeze your credit reports with the three national credit bureaus (Equifax, Experian and TransUnion). In this case, to “freeze” means to make your credit history unavailable to lenders (with an exception for those with whom you already have account relationships).

What’s the benefit? Lenders always check credit history before issuing loans or credit cards. If lenders can’t access your credit file, then they will not issue credit in your name. The benefit of a credit freeze is that no identity thief will be able to open any accounts in your name.

If you do not expect to apply for credit any time in the near future, a credit freeze is a tool that could help you prevent one type of identity theft. If you have already been a victim of identity theft, there is no cost to place a freeze on your file. If not, however, there is a fee. Rules vary by state; in Iowa, the fee is $10 to freeze your file, and if you wish to lift the freeze, the fee is also $10. Since there are three national credit reporting agencies, it would cost $30 to place a freeze on all three.

If you decide to apply for credit, you can temporarily lift the freeze for a fee of $12, just long enough for the lender in question to check your file. You will receive a PIN (personal identification number) to authenticate your request to lift the freeze.

A credit freeze is not an appropriate step for everyone, but for consumers who are unlikely to borrow money in the next several years, it can provide an extra level of security.

For more information, including laws in other states, go to the Consumers Union Guide to Security Freeze Protection.


Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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