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A Credit Freeze

Chris Farrell Feb 8, 2008

Question: I want to protect my identity, and I’ve heard individuals are now able to put a credit freeze with the credit bureaus. But it appears that it can get very difficult and expensive as I may need to lift this freeze for car loans or even simple things like getting a new cell phone plan. Is getting a credit freeze worth the cost and hassle for the protection or is there a better way? Tatenda

Answer: Before I give you my answer, here’s an email I got the other day from John. He’s unhappy with my favorable comments about putting on a credit freeze with the major reporting bureaus:

“I followed Chris Farrell’s advice to freeze my credit report to avoid identity theft. Worst idea ever!!! I needed to refinance recently but could not get Experian to lift the freeze in a timely manner (Equifax and TransUnion were fine) and the mortgage company required all three credit reports. Could not contact anyone at Experian (which has made a fine art of avoiding any direct contact with a person at their company via phone, mail or e-mail). Lost my great re-finance rate. Cost me $45,000 over the life of the loan. Please caution listeners to think about all the implications of doing this.”

So there’s a cautionary note about freezing your credit. But I remain a fan of a credit freeze, and in recent months the credit reporting bureaus have made it a bit easier on their customers to create a freeze.

Still, John’s email emphasizes that a credit freeze only works if you aren’t doing much on the credit side. In other words, if you’re satisfied with your cell phone contract, credit cards, mortgage and auto loan, and you don’t see any need for new credit for the foreseeable future, then a credit freeze and the $30 total it will cost you seems like a good move to me. (It’s $10 for each bureau to initiate a freeze.) When you need a new loan, make sure you act on the early side to lift the freeze. (Again, $10 for each bureau to temporarily lift the freeze.) But if John’s experience gives you pause–don’t do it.

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