Consumers are vaguely aware of the ins and outs of credit freezes, and that might be a bad thing. A recent study found that while 75 percent of Americans know of the credit freeze process, 71 percent said they’ve never given it a try. Here is what you should know about an effective financial tool.
The What
A credit freeze is exactly what it sounds like — it freezes your credit report so no one can open new accounts in your name. And yes, that includes you. However, you can temporarily pause the freeze if you are looking to open a new card. A credit freeze is free and does not hurt your credit score.
The Why
As Money reports, the FTC said the number of data breaches in 2021 rose by 17 percent compared to last year. In other words, hackers aren’t going anywhere. A credit freeze is a good way to prevent them from stealing your info and using it against you.
The When
Consider your financial situation before freezing your credit. If you’re applying for a credit card or a mortgage any time soon, it makes sense to wait for the freeze because lenders won’t be able to check your credit. If they can’t check your credit, the approval process will be delayed.
The How
You can freeze your credit at each major credit bureau. You’ll need to provide personal info like your Social Security number and birth date. You’ll also be asked to create a PIN to access the freeze later when you want to disable or pause it. Put it somewhere safe! It’s tough to replicate if you lose it.
This article was originally posted on savvymoney.com
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