Update 09/20/18: When I originally posted this article I stated that you do still receive pre-screened offers. This was based on information found on the FTC website. Readers rightfully pointed out that you do receive some offers but not as many as you’d receive when your reports are unfrozen. Sites like CardMatch also won’t show any offers, because of that I’ve added it to the cons. I’ve also added having to unfreeze reports for bank account openings as a con as well. I believe it’s important to outline when you make mistakes so that’s why this post has been reposted.
Starting on Friday consumers will be able to freeze and unfreeze their credit reports for free. Several readers have asked if they should keep their reports frozen or not. Before we get started it’s important to understand what freezing your credit report actually does.
When you freeze your report it prevents it from being accessed by anybody, the only exceptions are that you can still access your own report and creditors that you already have an existing relationship with can still access your report but they can’t extend you new lines of credit. Having your report frozen can be useful for a number of reasons (discussed below), but the main reason people want to freeze their report is to prevent identity thieves from opening accounts in their name. If your report is frozen then a lender cannot access it and because of that no credit will be extended. When you place a freeze on your report you’re also given a PIN or password and this needs to be used whenever you want to:
- Unfreeze your report
- Allow a specific third party to access your report (e.g a lender)
Now that you understand what a credit freeze is let’s talk a look at both the pros and cons of keeping your reports frozen.
- Security. As mentioned previously the main reason people want to freeze their report is to prevent identity thieves from opening new accounts and causing havoc. Having a freeze in place makes this significantly more difficult as they need to know your PIN/password to be able to lift that freeze.
- Spreading credit inquiries over all three consumer reporting agencies. There are three main consumer reporting agencies: Equifax, Experian & TransUnion. One reason credit card companies will deny you is for too many recent inquiries for credit. An inquiry for credit (also known as a hard pull) is done whenever you apply for a loan/credit card, but in most cases they will only do a hard pull on your credit report from one of these three consumer reporting agencies. What reporting agencies a lender will pull from largely depends on what state you live and the lender themselves. It’s not uncommon for most lenders in one state to all pull from the same consumer reporting agency. In cases like that it’s useful to be able to ‘spread’ your inquiries over the other two unused agencies. This is possible with some lenders as they will pull your credit report from a different reporting agency if one is frozen. For more details read this post. This isn’t that applicable in this case as it normally requires one to be unfrozen, but sometimes they will accept the PIN/password instead. Keep in mind things like the Chase 5/24 rule care about how many new cards you have opened, rather than how many inquiries you have and new cards show up on all three reports.
- You will need to unfreeze your report every time you apply for credit. If you want to apply for any loan, you’ll either need to unfreeze your report or provide an access code so the lender can view the report. Keep in mind under the new law the consumer reporting agencies have to unfreeze it within one hour and freeze it within one day.
- Pre-screened offers. According to the FTC you can continue to receive pre-screen offers even with a frozen report. In practice most people report not receiving pre-screened offers or not receiving as many as they previously did. Keep in mind sometimes pre-approved offers are higher than publicly available (e.g Platinum 100,000) or bypass rules (e.g Chase in branch or selected for you offers) so having access to these is important. In particular CardMatch won’t show any pre-approved offers if your reports are frozen.
- Bank account bonuses/openings. When you open a new bank account (for the sign up bonus or other purposes) they do a soft pull on your credit report. If your report is frozen then they will usually just deny you. For those chasing bank account bonuses this means you’ll need to unfreeze your report each time you do.
Can I still receive FICO/credit score updates?
According to this page on Credit Karma you can’t enroll for Credit Karma when your report is frozen, but you will continue to receive updates. This makes sense as existing relationships are allowed continued access as long as no credit is being extended. This should also be the case for other free credit monitoring/scoring sites and for free FICO scores provided by lenders.
Does freezing your credit report affect your score?
No it does not.
I think it’s really an individual choice on what the best option is. Having your identity stolen and accounts opened in your name sounds like an absolute nightmare. I don’t mind having to freeze and unfreeze my reports, but not having access to pre-screened offers is a big deal. I think I’ll end up keeping mine unfrozen for now, but it might depend on how difficult it is to freeze and unfreeze.
I’m also almost certain I’ve missed some pros and some cons, feel free to share your own thoughts in the comments below.