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With data breaches at large organizations, such as Equifax and Facebook, it’s not uncommon to wonder if you should place a lock on your credit. Placing a lock on your credit or security freeze blocks anyone from opening new accounts. If you’ve experienced someone filing a tax return or getting a home mortgage in your name or some other form of identity theft, then you may have considered placing a lock on your credit. But if you’re trying to decide whether or not placing a lock on your credit is right for you, it’s important to take a few considerations into account. Here are three key factors to help you make a sound decision:
Placing a lock on your credit impacts access to your credit report. If you’re seeking mortgage pre-approval or you’re planning to lease a new car, then a credit freeze only makes it more difficult for potential lenders to view your credit report and extend loan services or other forms of credit to you. That’s because locking or freezing your credit is a way to restrict who accesses your credit report. When you lock your credit, it’s more challenging for potential thieves to see your information. But it also means that lenders won’t be able to view your credit report without your permission.
When you freeze your credit, the credit bureaus provide you with a special PIN. You need to keep track of your PIN because it’s how you can view your own credit report. Without your PIN, potential creditors won’t be able to view your credit reports.
If a fraudulent credit card was opened up in your name or one of your cards was stolen, then a credit freeze may not be necessary. But if the problem is widespread, such as having several credit cards stolen and someone filing taxes in your name, then consider placing a lock on your credit as a precaution. It’s important to note that a credit freeze is not permanent and isn’t a guarantee that identity theft won’t happen. Credit freezes typically last for 90 days up to one year. That means you will need to request to lock your credit again once the credit freeze ends.
One thing to remember: A credit freeze prevents fraudulent new accounts, but leaves your existing accounts unprotected. If you’d like to protect your current accounts as well, it’s important to take a look at an identity theft protection plan. We’ve done a full report on the best identity theft protection companies such as Lifelock, Identity Guard and Identity Theft so you can decide which one is right for you.
A credit freeze helps you take control of who can view your credit and adds an extra layer of protection for your financial and personal information. But a credit freeze is a personal choice, too. By considering your personal situation, you can better determine if placing a lock on your credit is right for you.