Pros and Cons of Freezing Credit

Key insights:

• Freezing your credit restricts access to your credit report, so new creditors may not view your file
• There are pros and cons of freezing credit: It can help prevent future fraud and doesn’t cost money or impact your credit score, but it can make it inconvenient to open a new legitimate account, and it doesn’t stop fraud that’s already happened
• While you cannot apply for a new Citi credit card with frozen credit, you may pre-qualify to see which cards and terms you may qualify for

A credit freeze, also called a security freeze, limits access to your credit report. Freezing your credit can prevent accounts from being opened in your name and may help protect you against fraud. However, having frozen credit can be inconvenient, as it adds more steps to applying for new credit. Here, we take a closer look at the pros and cons of freezing credit.

How credit freezes work

Credit freezes prevent lenders from running a hard credit check by limiting access to your consumer credit report. A hard credit check or inquiry happens when a lender checks your credit report to make a lending decision, which can impact your credit score.

A credit freeze doesn’t prevent soft inquiries, which is when you or someone checks your credit report without you submitting a new credit application. Credit bureaus are still able to share your credit report with people and companies requesting it for reasons other than opening a new account. So, you can still pre-qualify for credit, and if you’re starting a new job or renting an apartment, your new employer or landlord should be able to check your credit.

How to freeze your credit

To freeze your credit, you’ll have to contact each of the 3 major credit bureaus and request a freeze. You can do this online, by phone or by mail. The exact steps may vary by bureau. In general, the process looks like this:

• Set up an account with the credit bureau.
• Log in or establish a password or PIN. You may be asked to provide personal details, like your Social Security number and date of birth.
• Request a credit freeze.
• You should get confirmation once your credit is frozen with each credit bureau.

Credit freeze vs. fraud alert vs. card lock

Credit freezes, fraud alerts and card locks are all fraud prevention measures. However, they refer to different things.

• Fraud alert: Placing a fraud alert requires lenders to check with you or otherwise verify your identity before opening an account in your name. Fraud alerts are time-bound (an initial fraud alert lasts 1 year, and you can choose to renew it) and don't limit access to your credit report. Unlike credit freezes, you only need to set a fraud alert with 1 major credit bureau — they will automatically notify the others.
• Card lock: If you’re concerned about fraudulent charges on your credit card, you may request a card lock with your card issuer. This could be temporary or you could choose to permanently lock the card and get a replacement.

Pros of freezing your credit

There are several key advantages of freezing your credit.

Helps prevent new account fraud

Credit freezes prevent lenders from running a hard credit check, which can help keep scammers from opening new accounts in your name.

If your information is leaked in a data breach, for example, you might decide to freeze your credit. Loan applications — fraudulent or not — may be pended or automatically denied at the credit-check stage because lenders are unable to access your credit report.

No impact on your credit score

Freezing your credit doesn’t have any impact on your credit score. However, your credit score can still change over time and will reflect your behavior as a borrower. So, things like making on-time payments can still help improve your score while missing a payment or using a large percentage of your available credit can lower it.

It’s free

You can freeze your credit with all 3 major credit bureaus for free. It's also free to unfreeze (or thaw) your credit whenever you want.

Available for minors and dependents

Freezing your child’s credit can help prevent synthetic identity fraud, which commonly targets children. This type of identity theft combines a person’s details, such as their Social Security number, with falsified information to create a new identity.

If you decide to freeze your child’s credit, you may need to provide proof of identity for both you and your child.

Cons of freezing your credit

Freezing your credit can make it less convenient to apply for new credit. It also doesn’t protect you from all fraudulent activity.

Requires action across all 3 credit bureaus

Unlike a fraud alert, freezing your credit requires you to interact with all 3 major credit bureaus. You’ll have to freeze or unfreeze your credit with all of them. The process may vary from bureau to bureau. If it’s your first time interacting with a credit bureau, you may have to create an account to freeze your credit, too.

Temporary unfreezing can be inconvenient

If you want to apply for a loan, you may need to unfreeze or thaw your credit, at least temporarily. Otherwise, you may run into issues during the application process. (Keep in mind that companies evaluating non-credit applications, like for jobs and apartment rentals, can still access your credit report while your credit is frozen.)

It can take anywhere from a few moments up to 3 business days for a credit thaw request to go into effect, depending on how you request it. You can typically request a thaw over the phone, online or by mail.

Doesn’t stop fraud that’s already happened

Freezing credit can only help protect you against future fraud — not fraud that’s already happened. And, identity thieves and scammers may still be able to gain access to existing accounts if they have your information, regardless of whether your credit is frozen. Monitoring your accounts for suspicious activity can help you catch fraud early.

Reasons to freeze your credit

Freezing your credit can be a smart way to help protect yourself from fraud and identity theft. It may also make sense if you don’t need to apply for credit in the foreseeable future and want to be proactive about protecting your credit. If you have children or elderly relatives, freezing their credit can help protect them as well.

Unfreezing or thawing your credit is similar to freezing your credit. You go through each of the 3 major credit bureaus and call, log in or mail your request to unfreeze your credit. You may have the option to request a permanent lift or a temporary one. With a temporary thaw, you may be able to specify on which dates you want your credit report to be accessible.

Can you apply for a credit card with frozen credit?

Applying for a new credit card requires a hard credit check, so you’d have to first thaw your credit before applying. It may take up to an hour for a credit thaw to go into effect if you do it online or by phone. The mail-in option could take up to 3 business days after the bureau receives your request. Factoring these timeframes into your application can mean a smoother process.

You can, however, pre-qualify for a credit card while your credit is frozen. By pre-qualifying, you can see which cards you're likely to be approved for and get an idea of the rates and terms you may be eligible for. Once your credit is thawed, you may apply for a new card.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.