These days, we hear more and more about data breaches and identity theft. When this happens, one of the first suggestions you may hear is to freeze your credit. A credit freeze restricts access to your credit report, making it more difficult to pull your personal financial information and take out additional lines of credit. While this can be inconvenient for physicians who are actively opening lines of credit (for example, when securing a mortgage, opening a new credit card, or getting a business loan to start a private practice), most physicians don’t continuously need access to credit checks. Freezing your credit can help protect you from fraud and is easily reversible, allowing you to access additional credit options when you need them. Below, we cover how freezing your credit works, the advantages and disadvantages to having a credit freeze, and how to unfreeze or “thaw” your credit.
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What is a credit freeze?
When you freeze your credit, you limit access to your credit report. Most reputable creditors will not approve a new line of credit such as a mortgage or a credit card without checking your current credit report, as they want to see how you’ve handled credit in the past to ensure you aren’t a liability risk of not paying. Therefore, if they cannot access your credit report, they will usually deny a request to open up a new account, limiting someone who has access to your information from taking out money or making a big purchase using your name or credit line.
While a credit freeze prevents most creditors from accessing your credit information, there are a few exceptions who may still be able to access your report, such as:
You can still access/view it
Current creditors (such as your mortgage lender or credit card company)
Debt collectors
Child support agencies
Select other government agencies
Credit freeze versus credit lock
Freezing your credit is free by federal law. The credit bureaus often also offer a “credit lock” service, which can come with a monthly subscription service. While a credit lock may allow you to instantaneously access or lock your credit, offering more convenience than a credit freeze, along with additional features, it may offer less legal protection in the case of a fraud situation. A credit freeze is typically the better option.
Why should I freeze my credit report?
The main reasons we see doctors electing to freeze their credit report are because:
Their identity has been stolen or their personal information, such as their social security number, has been compromised
They’ve heard nightmare stories of friends, family, or colleagues that have had this happen and are scared of it happening to them.
These situations often happen with online data breaches through cybersecurity attacks. Unapproved lines of credit are also unfortunately common within families, where a parent or other relative who has access to your information will open up a credit account in your name without your knowledge.
If you’ve received a notice in the mail or via email that your social security number or other personal information has been potentially compromised, it is a generally a good idea to freeze your credit.
While having a credit freeze can make it difficult to obtain new credit instantaneously, it doesn’t affect the current credit you already have, so it normally doesn’t change the day-to-day operations of your finances. If you aren’t actively looking to secure a new line of credit, having your credit frozen is a great added layer of protection all doctors should consider, regardless of if they’ve been included in a data breach.
Freezing your credit does not affect your credit score.
Advantages of freezing your credit
Vastly reduces identity theft and fraud. If a creditor cannot access your credit report, they are unlikely to approve a new line of credit. This can prevent fraudulent accounts from being opened in your name that you aren’t aware of.
Cuts down on the headache of identity theft. Cybersecurity attacks are becoming more and more prevalent as our dependence on technology continues to increase. Much of our financial interactions are now conducted online, such as online banking and online mortgage applications. While legally, you aren’t responsible for credit that you didn’t approve, it can be a time consuming and difficult process to prove which charges and credit accounts are fraudulent. A credit freeze can help you lessen the impact of your personal identification information being stolen.
Offers peace of mind. We often talk about the importance of asset protection for physicians. Freezing your credit can offer an additional layer of protection and give you peace of mind that your credit is as secure as possible.
It’s completely free and easy to do. Freezing and unfreezing your credit is free. It can take a little time (though it’s still not a complicated or lengthy process) to initially establish a credit freeze, but once you have it in place, you can unfreeze and refreeze your credit in a few minutes online or over the phone.
Disadvantages of freezing your credit
Makes it difficult to open new accounts. While this is an advantage when it comes to identity theft, it can be a disadvantage when you want to open a new credit account, such as a new credit card for the travel rewards. You’ll need to remember to temporarily unfreeze your credit before applying for credit, though this process is faster than initially freezing your credit.
Extra work when moving. Mortgages are a huge line of credit, but they aren’t the only consideration when moving. Utility companies will often check your credit report to determine what deposit, if any, to require before establishing an account for a home or apartment. And apartment leasing offices usually run a credit check during the approval process as well. You’ll likely need to unfreeze your credit a few times or for a few weeks during your relocation.
It doesn’t protect you 100% from fraud. While a credit freeze protects you from new lines of credit where creditors check your credit score, not all creditors do their due diligence on every account. A case of identity theft may slip through the cracks. In addition, it doesn’t prevent you from fraudulent charges on credit you already have, such as unauthorized charges on a credit card that’s been compromised (though hopefully your credit card company will protect you from that).
It isn’t always instantaneous to freeze and unfreeze your credit. Credit bureaus must freeze your credit report within one business day when you apply by phone or online. They have up to three business days if you request a freeze by mail. While the process is quick, it isn’t instantaneous, which is one of the reasons it can be a good idea to proactively freeze your credit instead of waiting until you know you’ve been compromised.
How to freeze your credit
There are three major credit reporting bureaus:
Different companies use different bureaus to check your credit report. To ensure a full credit freeze, you need to freeze your credit with each of the three bureaus. Freezing your credit is free to do, and typically is a quick and easy process.
To freeze your credit, you can typically use one of the following methods (do this for each of the companies above):
Create an online account (recommended)
Call them
Mail in a form (not recommended)
You will need the following on hand for the process:
Your general personal information (including your SSN and addresses you’ve lived at for the past few years (usually 2-5)
A government-issue ID handy to prove your identity
You may need a proof of address
Have an idea for PIN number
They will likely also ask you a few questions about information from your credit report to further confirm your identity.
Keep your login information or details of your credit freeze secure where you can remember how to access them. If you lose these, it can be a real pain.
Credit freezes for children
While credit isn’t something you typically worry about for your children, credit can be taken out under a child’s SSN. Just as you can freeze your own credit, parents and guardians can freeze the credit of their children. If you’ve had issues with identity theft by members of your family in the past, this is a safeguard you can put in place.
How long does a credit freeze last?
A freeze on your credit lasts indefinitely until you alert the credit bureaus that you wish to remove it.
How to unfreeze your credit
When you need to access your credit, you have two options: you can either completely remove your credit freeze or schedule a temporary lift of the credit freeze (“thaw” your credit). Temporarily lifting the freeze is usually the best option, and can be done online through the account you used to create the freeze.
Speak with your potential lender or creditor. If they only use one credit bureau, you can schedule a lift of your credit freeze only with that agency. If they use two or all three, you will need to unfreeze your credit everywhere.
For a temporary unfreezing, you can set the dates for when your credit report will be available for access. Work with your creditor to confirm their timeline for their check. You may want to add a few extra days, just to avoid issues if they wait.
You need to plan ahead when unfreezing your credit, but if you request an unfreeze online or by phone, the bureaus have to complete your request within an hour.
What else to do if you’ve been notified of a data breach
If you’re reading this article, you’re probably thinking about the worst case scenario or have already been notified that you’ve been involved in a data breach. The following are some good things to consider in this situation.
Change your passwords on all exposed accounts, as well as any other accounts that you have that use the same password or a similar password, so that the people with access to the information can’t use that password to access other accounts.
Enable multi-factor authentication on the accounts which allow you to, which will prevent those who stole your data from being able to access other accounts with the information they have, such as logins, names, and passwords.
Check your credit report for unauthorized lines of credit - you are able to do this for free weekly at annualcreditreport.com.
Add free fraud alerts to your credit report, which will notify creditors to take extra steps to verify your identity before extending credit.
Conclusion
Freezing your credit is a great way to help prevent fraud and identity theft in our digital age, but it isn’t a perfect solution. You should still check your credit report every year or so (you can do this for free through the credit bureaus) to ensure everything on your credit report is correct.
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