The Ins and Outs of Freezing Your Credit

As the holidays quickly approach, more people will be using their credit cards. More media outlets will begin publishing or running stories on how to protect your identity, and more identity thieves will be on the lookout for easy targets.

Some people have begun to consider freezing their credit, but have difficulty in deciding whether it is really the thing to do. All three credit bureaus have decided to extend the option to freeze to anyone in the United States.

Should you decide to freeze your credit, this means exactly what it sounds like. It will become more difficult (but not entirely impossible to do so) to open a new credit account. It just makes it more difficult for a thief to do so.

However, if lenders need to, they can still view your credit history, and just because you freeze your credit, it doesn't necessarily mean that you will not get anymore of those annoying pre-approvals from credit card companies. (You will still stay on marketing lists).

Whether this is the right move to make is a matter of why you want to do it to begin with. If you're just trying to reduce the amount of junkmail, it's not really a good option and if you know you need credit in the short run it also may not be the best decision to make. In addition, unfreezing the freeze is somewhat of a hassel - though not necessarily difficult.

To unfreeze your credit, you just need to contact the three credit bureaus and hand over your personal identification number (that you receive when you freeze your credit). You will also have to pay $10 to each bureau to unfreeze your credit (you also pay this same fee to freeze it). Don't expect to immediately get your credit back. It may take a few days to do this.

If you want to avoid the fees, another precaution you can take that isn't as drastic is to just place a fraud alert on your credit. In doing so, this means that if a new credit account is opened up under your identity, the line of credit will not be approved without a phone call to you first. Thus, thieves using your identity to get an intant line of credit at a retail store (which more and more stores are beginning to offer these credit cards) will not go through without a call to you first.

This service is free and usually requires you only having to contact one bureau (which will then alert the others). However, it is a good idea to check to make sure all three bureaus are aware of the alert. In addition, the alert doesn't last forever and usually ends within a certain period of time, so check to be aware of this time period if you want to continue it after the extension.