Credit Freeze

A credit freeze, also called a security freeze, is a legal restriction placed on a consumer's credit file at each national credit reporting company. Under the Fair Credit Reporting Act, a consumer has the right to freeze their credit file, which prevents most lenders, insurers, landlords, and other third parties from accessing the file without the consumer's express authorization. A freeze must be placed separately at each of the three national credit reporting companies: Equifax, Experian, and TransUnion. It is distinct from a fraud alert, which is temporary and only requires businesses to take reasonable steps to verify identity. A freeze is more comprehensive and remains in place until the consumer lifts or removes it. Consumers can place a freeze online, by telephone, or by mail. Federal law requires the credit reporting companies to place freezes and to lift them free of charge. When a consumer needs a third party to access the credit file—for example, when applying for a mortgage, auto loan, or apartment—the consumer must request a temporary lift, also known as a thaw. A lift can be for a specific lender and a specific period, or it can be a general lift for a certain number of days. Alternatively, the consumer can remove the freeze permanently. Each credit reporting company provides a personal identification number or password to manage the freeze. The company must act within a specified time after receiving a request, typically within one business day for online or phone requests. A freeze does not block all access. Exceptions include existing creditors who need to review an account, collection agencies acting on an existing debt, and government agencies acting under a court order or subpoena. A freeze also does not prevent the consumer from obtaining their own credit report or score. It does not stop identity thieves from using existing accounts, filing fraudulent tax returns, or opening accounts that do not require a credit check, such as certain bank accounts or utility accounts. A freeze does not directly affect a credit score because it is not a credit account or an inquiry. However, if a lender cannot obtain the credit report, it may deny an application or decline to offer credit. That is why temporary lifts are commonly used to allow a specific lender to review the file. A credit freeze differs from a credit lock, which is a commercial product offered by the credit reporting companies, and from a security alert, such as an active duty alert for military members. The freeze right also extends to certain protected individuals: a parent or guardian can place a freeze on behalf of a minor child or an incapacitated adult. To place a freeze, the consumer must provide identifying information such as name, address, Social Security number, and date of birth. The credit reporting companies must then confirm the freeze in writing. Consumers can also request a freeze extension or a permanent removal at any time. Because a freeze restricts access to the credit file, it is a tool for limiting unauthorized access, not a method for changing credit information or credit scores.

A consumer places a security freeze with each national credit reporting company after a data breach. Months later, the consumer applies for an auto loan. The lender cannot access the credit report. The consumer requests a temporary lift from each company for that specific lender and a defined period. Once the lender obtains the report, the freeze remains in place for all other lenders.