Why do people elect to put their credit “on ice”?

If you are worried about getting hacked – and, these days, who isn’t – a credit freeze is a precautionary measure that may be worth considering.

Is a credit freeze an iron-clad, 100% guaranteed way to protect yourself from Identity Theft? Unfortunately, no. Just about anyone could fall victim, just like almost anyone could become a victim of a home burglary. But ask yourself this – if there are two homes side-by-side, one with an advanced home security system and the other without, which home do you think would stand the greater risk of being burglarized?

Think of credit “freezing” similarly – as an increased measure of security. While the term “credit freeze” may bring up some negative connotations in your mind, a credit freeze is actually a positive move you can make to reduce the chances of identity theft.

The cost is minimal – and now many of us have the option. Years ago, only victims of hackers could request credit freezes. In 2007, that changed. In that year, the three consumer credit bureaus all decided to let consumers request freezes. The fee is nominal – typically $20 or less. Compare that with a credit monitoring service, which can run you over $100 yearly.1,2

 In 2010, 47 states have laws requiring credit bureaus to offer their residents credit freezes. Some state laws arrange senior discounts for older consumers who request a freeze – in California, for example, the fee per freeze is $10 but $5 if you are 65 or older.3

 How does a credit freeze work? The person wishing to, in essence, seal their credit history would go online and contact one of the three credit bureaus – Equifax, TransUnion or Experian – to request a freeze. (Sometimes this can be done via certified mail or even via phone.) The credit bureau would then issue a PIN for purposes of accessing those “frozen” credit reports. So, if a thief wanted to exploit that credit and/or credit history, he or she wouldn’t be able to – without the PIN.

If you need to apply for a loan or a job, you can “thaw” your frozen credit history using your PIN. There is also a fee to thaw your credit, typically about $10 per bureau. Paying that fee may allow you a one-time thaw or a thaw for a specified time period.

Why doesn’t everyone do this? Some people don’t realize they have the option. Others have considered it, but they would rather not put up with a couple of factors. If you constantly open new credit accounts or if your credit history is checked frequently, it is irritating to pay a thaw fee again and again. Then there’s the wait: thawing your credit usually takes a few days.2

It is important to recognize that a credit freeze will not keep everyone out of your credit history – it is only as secret as your PIN. Not only that, businesses that have an existing relationship with you can still look inside your credit reports. A freeze is also not a remedy for ID theft – if theft is already occurring in one of your credit accounts, a freeze won’t stop it. A freeze must be requested before the crime is committed.2,3

Should YOU freeze your credit?
The older you are, the more merit the idea may have. Credit freezes are also sometimes requested by divorcing couples when trust is in short supply between ex-spouses. You may want to freeze your credit whether you have been hit by ID theft or not – it may end up saving you money and stress someday.


These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. www.montoyaregistry.com www.petermontoya.com


1 usatoday.com/money/perfi/columnist/block/2007-10-08-credit-freeze_N.htm


2 walletpop.com/blog/2010/09/03/freeze-your-credit-its-one-way-to-cut-out-the-con-artist/ [9/3/10]

3 creditcards.com/credit-card-news/credit-report-freeze-1282.php [9/2/10]

3 creditcards.com/credit-card-news/credit-report-freeze-1282.php [9/2/10]