Is a Credit Freeze for You?

To freeze or not to freeze? It’s a common question, particularly after reports of yet another breach of payment card data like those at Home Depot, Kmart and Dairy Queen.

The answer: Probably yes — but not because of those kinds of breaches.

Certainly a credit freeze (also known as a security freeze) is a great way to proactively prevent identity theft and is advised for past victims of this crime who are likely to be targeted again. But it’s not foolproof and, depending on your situation, may best be delayed.

The biggest pro: Once enacted, a credit freeze restricts access to your credit report, checked by creditors before new financial or service accounts are issued in your name. Without seeing your report, creditors won’t approve accounts to ID thieves posing as you. (Current creditors, as well as debt collectors working on their behalf, can still access your credit report, along with government agencies involved with a court order, subpoena or search warrant issued against you.)

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A related con: You cannot get new credit with an active freeze. So hold off on placing one if you’re planning to apply for new credit cards (like store-branded plastic offering 20 percent off your holiday purchases) or a mortgage, car or other loan. Ditto if you’re planning to switch utility or cable providers, apply for a new job or shop for insurance; these businesses also check credit reports  and, sometimes, credit scores.

If you already have a freeze in place, you can lift it for certain dates or specific entities (say, a prospective employer or service provider). But it may require a fee of up to $12 per credit bureau. Hint: If you're lifting a freeze for a particular company, ask the business which bureau it will use to check your credit report; then you can lift the freeze with just that bureau, saving money.

Other pros and cons:

Pros

* With a freeze  you can still access your free credit report from the major credit-reporting bureaus. You’re entitled to three freebies per 12-month period. It’s best to get one each from Equifax, Experian and TransUnion, spaced out several months apart.

* It doesn’t affect credit scores.

* As long as the freeze is temporarily lifted (with a designated PIN or password), you can still open new credit cards, apply for jobs or leases, or switch utility or insurance providers without issue.

* A freeze provides better protection and costs less than a credit-monitoring service.

* It typically lasts until you remove it.

Cons

* A freeze does nothing to prevent fraud of existing accounts — so don’t be lulled into a false sense of security. You still need to closely monitor your current bank, credit card and other financial accounts, especially if your payment card info was recently hacked.

* Although typically free for those over 65 and for people who can prove they were victims of identity theft (expect to provide documents such as a police report), younger nonvictims usually must pay to place, as well as lift, each freeze and thaw. Costs vary by state, but typically it is $5 or $10 per placement with each credit-reporting bureau.

* A freeze is effective only if it’s activated with all three credit-reporting bureaus. (Conversely, a fraud alert is always free and needs to be placed with just one credit-reporting bureau, which will inform the others. But they are less protective; creditors are supposed to notify you, but are not required to, if credit applications are made in your name. An initial alert lasts only 90 days, though it can be renewed indefinitely.)

* Lifting a freeze can take up to three business days, making “instant credit” unavailable and delaying credit or service applications. However, some states have passed laws that require the freeze to be lifted within minutes of the request.

* States determine freeze laws, which vary depending on where you live.

>> Get discounts on financial services with your AARP Member Advantages.

* A freeze will not prevent you from getting pre-screened offers of credit or insurance. To stop those, call 1-888-5-OPT-OUT (1-888-567-8688) or go online.

To place a freeze, contact each of the three credit-reporting bureaus:

* Equifax — Phone: 1-800-525-6285

* Experian — Phone: 1-888-397-3742

* TransUnion — Phone: 1-800-680-7289

You’ll need to supply your name, address, date of birth, Social Security number and other personal information. After receiving your freeze request, each bureau will send you a confirmation letter with a unique PIN or password, which you should keep in a safe place.

Photo: RoyalFive/iStock

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