Freezing Your Credit

In light of the recent Equifax breach, we’ve received lots of inquiries about the pros and cons of freezing your credit.

I’m a big proponent of freezing your credit, especially if you have no intention of taking on new credit within the near future. Doing so makes it incredibly difficult for thieves to take out credit in your name as a freeze would not allow banks to pull (view) your credit.

There is very little downside to freezing your credit. It does not alter your credit rating or score. It also will not be an issue for any of your current accounts, such as an existing credit card. The only real downside is the need to “thaw” or unfreeze your credit prior to applying for a new loan or credit card. This requires a small bit of planning as it takes a couple days to thaw your credit.

There are some other reasonable alternatives to freezing your credit. For example, credit monitoring services such as those offered through LifeLock or IdentityGuard.  But while credit monitoring can be a valuable service, it generally does not stop identity theft. Rather, it simply monitors your credit and notifies you quickly if fraud takes place. Interestingly, the CEO of Lifelock has supposedly had his identity stolen multiple times.

What about placing a fraud alert with the credit reporting agencies? This is also a viable option. Essentially a fraud alert will require the credit reporting agency to contact you prior to issuing credit. The downside of this is that fraud alerts only last 90 days and must be renewed.

I recently froze my credit. Here’s the process if you also decide to do so:

  • Go to the each of the major agencies sites (Equifax, Experian, TransUnion)
  • Complete the information requested. Equifax and Experian were pretty simple to do. TransUnion requires you create an account and they attempt to get you to buy there credit monitoring system.
  • Pay the fee. Equifax does not charge to place a credit freeze. Experian and TransUnion each charge $5. (This is for AZ residents. It may be slightly different depending on where you live)
  • Each site issues a PIN number. It’s important you keep this in the event you wish to thaw your credit in the future.

Questions or comments? Feel free to contact us.


About Michael McGinley, CFP®, AIF®

Michael McGinley has worked in the financial services industry for over 15 years. He is currently a partner at Providus Advisors, an investment advisory firm located in Chandler, AZ.

Please Note: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities. Please visit our Important Consumer Disclosure for more information.