Freezing Your Credit: The Pros and Cons

It’s been more than a year since the Equifax data breach and many consumers still report their credit remains frozen from when the news broke in 2017. Freezing your credit means that no one (including you) can access your credit file until you unfreeze it with a PIN or passphrase. One unfrozen, your credit will need to be refrozen in order to maintain the same level of security.

With frozen credit, the no one (not even you) can open new credit accounts in your name providing a large layer of security from hackers. After the Equifax breach, consumers froze their credit at one or all three of the major credit reporting agencies to protect themselves from hackers. However, the impact of this kind of security can be far reaching, according to some experts.

More than 100 consumer-reporting companies provide data on consumers, such as their bill paying or criminal history, to help decide eligibility for jobs or financial, insurance, medical and other products. Most of these reporting agencies receive credit data from Equifax, Experian and TransUnion and having frozen credit can impact the results of these types of inquiries.

One common drawback of freezing your credit is the steps to unfreeze your credit when necessary to apply for a new credit line. At the time of freezing, a consumer would typically receive a PIN that could quickly unfreeze their credit if needed. If the PIN is lost or forgotten, however, unfreezing one’s credit can become a lengthy and cumbersome task. If you have frozen your credit, be sure to keep your PIN in a safe and memorable place to ensure that you do not experience any delays in accessing credit in the future.

Often times, consumers forget that they have frozen their credit and don’t unfreeze before it is reviewed for a new job, apartment, or utility company. Not having the PIN to unfreeze your credit in this instance can really pose some setbacks.

Another drawback, if you aren’t a confirmed victim of identity theft, there are sometimes fees associated with freezing or unfreezing your credit. The fees range from $2 to $12 per request.

While freezing your credit can make you safer, Gerri Detweiler, education direct at Nav Technologies Inc., said one concern with consumers freezing their credit is that they then feel safe and neglect to take other important precautions, such as monitoring their bank and credit card statements for unauthorized activity.

In a Wall Street Journal article published last year, John Ulzheimer, a credit expert who formerly worked at Equifax and credit-score company FICO, said that consumers were more likely to be at risk of bank fraud as a result of phishing—attempts made to obtain personal information, such as usernames, passwords and credit card information online by posing as a financial entity such as your bank—rather than have new accounts opened by hackers who would have to find some way to fund the accounts.

Most experts agree that vigilant self-monitoring of accounts, maintaining proper password safety and notifying financial providers when you notice something unusual or unauthorized immediately is the best way to protect yourself from fraudulent activity.

Like many of your financial partners, Merck EFCU takes security as the highest priority.

If you notice anything unusual with your Merck EFCU accounts, please contact us immediately.