Credit Freeze in the US: What It Is, When You Need It and How Not to Derail Your Own Application

What a credit freeze is

A credit freeze is a ban on a credit bureau showing your report to new lenders. A bank receives a card application, tries to look at the report and sees: access denied. Without a report, almost no bank will approve credit. That is why a fraudster with your SSN cannot open a card or take out a loan in your name.

A freeze is placed separately at each of the three bureaus: Experian, Equifax and TransUnion. If you freeze only one bureau, a fraudster can get through another. It is free, and a freeze has no effect on your credit score at all. A freeze is like a lock on a door: you decide when to open it and for whom.

Where a freeze is placed

Freeze, fraud alert and lock: what is the difference

These three tools are often confused. All of them protect against fraudsters, but in different ways:

A fraud alert only needs to be placed at one bureau, and it will pass it on to the other two. A regular fraud alert lasts a year. If you have already become a victim of identity theft and it is confirmed, you can place an extended alert for seven years. A freeze, however, has to be placed at each bureau yourself.

When it is worth freezing your credit

At Excalibur Credit Solutions, we advise considering a freeze in these cases:

• A data breach. You received a letter from a company saying your data, including your SSN, ended up with hackers.
• Lost documents. Your wallet was stolen, or you lost your passport, SSN card or green card.
• Suspicious inquiries. Hard inquiries from banks you never applied to appeared on your report.
• Identity theft. Someone has already opened an account in your name.
• You are not planning new credit. If there will be no applications in the coming year, a freeze is simple insurance.

Many people keep their credit frozen all the time and lift the freeze only before applying. That is normal practice. If you have noticed other people's entries on your report, start with the guide identity theft protection. What to do in case of identity theft is covered in the article identity theft and your credit report.

How to place a freeze

A freeze is placed on each bureau's website or app, by phone or by mail. Online is easiest: you need to create an account and verify your identity. The bureau will ask questions about your history: for example, which bank holds your car loan or at what address you used to live. Online or by phone, a freeze usually takes effect within a day, and often immediately.

To place a freeze you need your SSN, date of birth and address. If the address at the bureau is old or has an error, identity verification may fail, and the bureau will ask you to send documents. This is a common problem for immigrants who have moved a lot. That is why it is useful to look at your report and check your personal information before freezing.

What a freeze does not do

Banks where you already have cards continue to see your report and review limits. If someone has already opened a card in your name, a freeze will not close it: such an entry has to be disputed separately as an error. Soft checks also go through: they do not affect your score and do not open new credit. More about the difference between soft and hard checks in the article what is a hard inquiry.

How to unfreeze your credit before applying

The main downside of a freeze is that it gets in your way too. If you apply for a card or a car loan with a frozen report, the bank simply will not be able to check it. You will be denied or asked to lift the freeze and apply again. To avoid this, do the following:

A common mistake: a person lifts the freeze at one bureau, but the bank checks another. This is especially true of car dealers: they send the application to several banks, and each may check its own bureau. Before buying a car, it is easier to lift the freeze at all three for a few days.

How long to keep a freeze

A freeze has no expiration: it stays in place until you lift it. Many clients ask whether the bureau will forget about the freeze in a couple of years. It will not, but you need to keep your login and PIN: without them, lifting the freeze will be harder. If you lose access, the bureau will restore it, but it may take time, and sometimes you will have to send documents by mail.

Do not forget the specialty bureaus

Besides the three main bureaus, there are other databases in the US. For example, Innovis, the so-called fourth credit bureau. There are databases for bank accounts, and others for utilities and telecom. Fraudsters sometimes open a phone line or a bank account in someone else's name, and such records end up there. Many specialty bureaus also let you place a freeze for free. We cover them in detail in the article specialty credit bureaus.

A freeze for children and elderly parents

Parents can freeze the credit of a child under 16. Children usually have no history at all, and fraudsters take advantage of this: credit is opened in a child's name for years, and the family finds out when the child turns 18. A freeze closes this door. For a child it is usually placed by mail: the bureaus will ask for a birth certificate and documents proving that you are the parent or guardian. If you help elderly parents with their finances, a freeze is sensible protection for them too.

How Excalibur helps protect your credit

Identity theft protection is one of Excalibur Credit Solutions' services. A manager will help set up monitoring, place a fraud alert and a freeze at the right bureaus and explain how to lift it before applying. If your report already has other people's accounts or inquiries, the manager will show them during the free review. After payment, our technical team works with the bureaus on inaccurate and unverified entries. Results are individual.