Freezing Your Credit: The Emergency Stop Button

Let’s envision the nightmare scenario: your ID has been stolen, and the thieves are opening credit card accounts as fast as the banks will let them. What happens? Should you just file a police report and accept the fallout?

Of course not. If all else fails and your credit is out of your control, you can ask the three credit reporting agencies to freeze your credit history.

What does it do? The freeze keeps your file from being seen by creditors. When they request a copy of your report from a reporting agency, they receive a message indicating that your history has been frozen.

This means that no new accounts can be opened, and thieves are stuck with a dead identity.

How do I do it? You need to contact all three agencies (Equifax, Experian, and Transunion) to fully freeze your credit. You can either do this online, or by mail. The state of New Jersey provides their addresses here.

Be sure to have all the required information ready. Your credit will be frozen no later than five days after you make your request.

You definitely should freeze your credit if your ID is stolen. In that case, the freezes are free. You can also freeze your credit if you suspect that your personal data is at risk, but this requires a small fee— $10 per bureau at most.

Does it affect my credit score? Not at all.

But what if I need to get a loan? You can temporarily lift the freeze by writing the credit reporting agencies again. The agency will send you a special PIN that provides access to your account. This process costs no more than $10 per bureau.

Sounds cool, but there’s got to be a downside. If your ID has been stolen, a credit freeze will essentially deactivate your ID, and thus discourage thieves. No downside there.

However, if others need near continuous access to your credit reports (if you’re applying for jobs, colleges, mortgages, etc.) the costs of constantly thawing and freezing will outweigh the benefits. If you suspect shenanigans, place a fraud alert on your accounts instead.

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