The credit freeze
The CFPB's definition: a credit or security freeze prevents prospective creditors from accessing your credit file. The FTC spells out the consequence: while a credit freeze is in place, nobody can open a new credit account in your name, including you, because a lender that cannot read the file will not open the account. Existing creditors and certain other parties can still see it, you can still request and review your own reports, and the CFPB states that security freezes do not impact your credit scores in any way whatsoever.
A freeze is free and has to be placed with each of the three nationwide credit reporting companies, Equifax, Experian and TransUnion, separately; the CFPB says to contact each on its website. A company must place a freeze within one business day of a phone or electronic request and within three business days of a mailed one. It lasts until you lift it. Lifting is the part people worry about, and it is fast: within one hour of a toll-free phone or secure electronic request, three business days by mail, and you can ask for a temporary lift for a specific period, long enough for a loan application, after which the freeze returns on its own.
The fraud alert
A fraud alert does not block anyone. The FTC describes it: an initial fraud alert tells businesses to check with you before opening a new credit account in your name, and unlike a freeze it does not stop businesses from seeing your credit report. It is free, placed with any one of the three companies, which must notify the other two, and comes in two durations: an initial alert that lasts one year and can be renewed, and an extended alert for identity theft victims that lasts seven years. The CFPB's list of situations that entitle you to a free credit report includes having placed a fraud alert, and an extended alert brings two free copies.
Side by side
| Credit freeze | Fraud alert | |
|---|---|---|
| What it does | prevents prospective creditors from accessing your credit file, so nobody can open a new credit account in your name, including you | tells businesses to check with you before opening a new credit account in your name; businesses can still see the report |
| Cost | free to place, lift and remove | free |
| Where to place it | with each of Equifax, Experian and TransUnion separately | with one of the three; it must notify the other two |
| How long it lasts | until you lift or remove it | initial alert one year, renewable; extended alert seven years |
| Time to take effect | within one business day of a phone or online request, three business days by mail | on placement |
| Lifting it | within one hour of a toll-free phone or secure online request, three business days by mail; temporary lifts for a chosen period | not needed; you confirm applications instead |
| Effect on your credit score | none whatsoever, says the CFPB | none described |
| Your own access to your reports | unchanged; you can still request and review your files | unchanged, and an alert comes with a free report |
Which one, when
The FTC's own summary is that a credit freeze is always a good idea, and that which alert is best depends on your situation and needs. The two are not exclusive, and the practical pattern is:
- Not planning to apply for credit soon: freeze all three files. There is nothing to lose, the score is unaffected, and a lift takes an hour when you need one.
- Information exposed in a breach, no misuse yet: an initial fraud alert at one company covers all three for a year, keeps applications possible, and gives you a free report to check; a freeze on top is the stronger choice.
- Identity theft has happened: an extended fraud alert for seven years, plus a freeze, plus disputes of the fraudulent accounts; the guide how to read a credit report covers the dispute process.
- About to apply for a mortgage, car loan or lease: lift the freeze at the company the lender uses, or all three, for a set period, then let it close again.
Placing a freeze: the sequence
- Pull your three reports first, free at AnnualCreditReport.com, so you know what the files show before you lock them.
- Go to each company's own website, Equifax, Experian and TransUnion, and request the freeze there; each gives you a way to manage it, a PIN or an account, which you must keep.
- Store those credentials where you store other important secrets: the password generator for the account passwords and the password strength checker for anything you chose yourself, since losing them is what makes a later lift slow.
- When a lender needs the file, lift it for a window at the right company, then confirm it has refrozen.
Neither tool protects existing accounts, which still need their own passwords and statements watched, and neither stops a thief from using a stolen card number. They stop the thing a credit report is for: new credit in your name. This guide reports the CFPB's and the FTC's published guidance for the United States.
Frequently asked questions
What is the difference between a credit freeze and a fraud alert?
A freeze blocks: the CFPB says it prevents prospective creditors from accessing your credit file, and the FTC adds that while it is in place nobody can open a new credit account in your name, including you, until you lift it. A fraud alert warns: the FTC says an initial fraud alert tells businesses to check with you before opening a new credit account, and businesses can still see your report. Both are free.
Does a credit freeze hurt my credit score?
No. The CFPB states that security freezes do not impact your credit scores in any way whatsoever. Your existing creditors can still see your file, you can still request and review your own reports, and the accounts you have keep reporting as before.
How do I unfreeze my credit when I apply for a loan?
Ask the credit reporting company to lift the freeze, either temporarily for a period you choose or permanently. The CFPB says a company must lift it within one hour of a toll-free phone or secure electronic request, and within three business days of a mailed one. You need to lift it at the company the lender will pull from, or at all three if you do not know which.
How long does a fraud alert last?
An initial fraud alert lasts one year and can be renewed, according to the FTC; an extended fraud alert, for victims of identity theft, lasts seven years. You place it with one of the three nationwide credit reporting companies, which must notify the other two.
Which one should I use?
The FTC says a credit freeze is always a good idea, and that which alert is best depends on your situation. The practical split: a freeze for the long stretches when you are not applying for credit, lifted when you are; an initial fraud alert when your information may have been exposed and you want applications checked without blocking them; an extended alert after identity theft.
Sources
- CFPB: What is a credit freeze? (prevents prospective creditors from accessing your credit file; free at the three nationwide credit reporting companies, each contacted separately; placed within one business day by phone or online and three by mail; lifted within one hour by phone or online and three business days by mail; no impact on credit scores; you can still review your own files)
- FTC: What to know about credit freezes and fraud alerts (a freeze means nobody can open a new credit account in your name, including you, until you lift it; contact all three bureaus; an initial fraud alert tells businesses to check with you first, lasts one year and can be renewed; an extended alert lasts seven years; one bureau notifies the other two; a credit freeze is always a good idea)
- CFPB: How do I get a copy of my credit reports? (free reports after placing a fraud alert, and weekly at AnnualCreditReport.com)