How Do I Lock My Credit Report?

Your credit report is a summary of all of your credit activity over the past 10 years or so, but it's also the key to all of your financial data. With identity theft becoming a real concern for every American, it makes sense to create a system that helps to prevent people from opening unauthorized credit accounts in your name and tampering with your credit in any way. One of the ways you can protect yourself from criminals is by implementing a credit lock or freeze. But is that always the best answer?

Credit Freeze Versus Fraud Alert

According Liz Pulliam Weston on MSN Money, people sometimes get fraud alerts and credit freezes confused. A fraud alert is a simple flag you can put on your credit reporting account that alerts prospective creditors that you would like the identity of anyone getting a credit account in your name to be confirmed before approving the application. A freeze means that no one, not even you, can apply for credit in your name. A fraud alert can be ignored by creditors and, according to Weston, it often is. A freeze is protected by federal law---the only way you can open new credit accounts when you have a credit freeze is to contact the credit bureaus in advance and give them a series of identification numbers and other information that would be needed to open up your credit profile to add an account. Fraud alerts are free; credit freezes have charges that vary by state.

Locking Your Account

To freeze (or lock) your credit account, you must first contact each of the three credit reporting agencies and find out their criteria for locking an account. You must then compile all of the information they need and send it to them by certified mail. A credit freeze cannot be executed through an online form.

After they have received your freeze request, the credit bureaus will issue you a personal identification number that you'll need to give them if you want to lift the freeze from your account. Each time you want to add a credit account to your profile, you will need to request a "thawing" of your report. Thawing can take anywhere from 15 minutes after receipt of an electronic request (you can request a thaw online after you have established a freeze) to up to 10 days. It will cost you to thaw your account, and it will cost you to refreeze it. Charges can range from $10 to $30 per request, depending on the state you live in and which reporting agency you're dealing with. Each agency requires you to process a credit freeze with them individually (a freeze with one agency doesn't automatically freeze all three).

Reasoning

Locking a credit account is a precautionary measure. The credit companies make their profit by processing your credit information for credit issuers, which is why they charge you to freeze your account. When you lock your credit account, it won't affect your credit score, but it can become inconvenient to try and get credit when your account is locked. If you've had your purse or wallet stolen recently, or if you start seeing strange credit bills in the mail for accounts you didn't open, then you could be the victim of identity theft. Freezing your credit profile is one way to protect yourself.