Several factors can and do influence your credit score. The balance on your credit card, how much debts you are carrying, how often you pay off debts, the age of your credit account, and whether you have recently requested a credit check are some of the things that influence your credit score.
But if you are planning to freeze credit card and wondering how the security freeze will impact your credit score, this post is for you.
What is a Credit Freeze?
A credit freeze is an instruction you give credit report bureaus, which mandates them to suspend inquiries into your credit report temporarily or indefinitely.
Usually, you will need to freeze your credit with each of the three major credit bureaus individually. Once the freeze is in place, no one can access the information on your credit report unless you lift the freeze.
How does Credit freeze work?
A credit freeze blocks access to your credit report, which helps prevent fraudsters from using your identity to apply for credit.
Since a credit check is usually one of the first steps in processing any credit application, a freeze on your credit account will effectively stop any unauthorized use of your identity to secure credit.
In the same way, freezing your credit will also prevent authorized people from accessing your credit report. For example, when renting a property, your landlord often conducts a credit check; if a credit freeze is in place, they will be denied access to the information on your report. So, that’s something you will have to keep in mind when requesting a credit freeze.
Each of the national credit agencies often activates or deactivates a credit freeze request for free. When you contact them for a credit freeze, you are usually provided with a pin or password. You will need to provide this password when you want to lift the freeze.
It takes about 20 minutes to one hour to have the restrictions on your credit report lifted. And, you can request to have the freeze removed permanently or temporarily for a specified amount of time ranging from a few hours to days.
Does freezing my credit affect my credit score?
The short answer is No. A credit freeze does not influence your credit score.
While freezing your credit does affect access to the information on your credit report, it does not in any way affect your score.
Sure, several things do influence your credit score; freezing credit is not one of them.
It is important to note that even with a credit freeze in place, all the regular account activities are not restricted. You can still track actions on your account.
You are required to continue paying any debt you owe as they are still being reported. And of course, you can always use your credit card to make payments.
So, even with a credit freeze in place, prudent use of credit, paying debts on time, and regularly, refraining from multiple credit checks and smart use of credit cards are the things that would, in reality, affect your credit score and not the credit freeze.
Can freezing my credit affect my chances of getting approved for loans?
In a way, yes, but not because of what you are thinking. In and of itself, a credit freeze cannot stop lenders from approving your loan application.
But, since every lender must do a credit check before processing your loan request, a credit freeze will make the process more complicated, and the lender may decide to set aside your application.
To avoid this from happening, you may want to first request for deactivation of the credit freeze from all major credit reporting bureaus, before applying for a loan.
Should I freeze my credit?
When you suspect you have been a victim of identity theft or fraud or suffered from a data breach, then requesting a credit freeze might be a safe security bet to safeguard your financial information.
However, as mentioned earlier, you will need to deactivate the freeze, even for a specific amount of time, to allow non-credit lending companies or people to run a check on your credit as part of their customer-screening process.
Aside from the inconvenience of contacting credit bureaus to unfreeze your account each time a company such as utility companies, insurance providers, or car renting firms want to run a check on your credit, credit freezing provides an additional layer of security for your financial information.