Dear Credit Card Adviser,
I have no need, nor any plans, to apply for credit. What are the disadvantages of a credit freeze to prevent identity theft?
— Charlie and Rose

Dear Charlie and Rose,
A credit freeze, also known as a security freeze, prevents a credit reporting agency from releasing your credit report or credit score to a new creditor or business without your consent. A freeze makes it more difficult for a criminal to open new accounts in your name when a credit check is involved.

It’s a security measure not without its disadvantages.

If you ever decide to apply for a credit card or loan, you’ll have to unfreeze your credit file in advance. In most states, credit freezes do not expire. You’ll have to request its removal and depending on the state you live in, there may be a cost to do so. In addition, the three major credit reporting agencies — Equifax, Experian and TransUnion — will each need to be contacted in order to remove the freeze from your credit file.

You already said you have no need to apply for credit. However, you may need your credit checked for other reasons — to secure a new job, get a new cell phone, obtain insurance, set up utilities, rent an apartment or even open a new bank account. In such cases, you may have to remove the freeze in advance in order for the business to check your credit history.

Finally, a credit freeze doesn’t prevent identity theft or fraud in all its forms. For example, a freeze would not prevent medical identity theft or fraud on existing accounts. In addition, if a potential creditor or business doesn’t perform a credit check, then an account could still be set up in your name.

Another option is to place a “fraud alert” on your credit report. A fraud alert is a notation on your credit report that tells any business checking it that you may have been a victim of fraud, and to take additional steps to verify the identity of the applicant. Nonvictims of identity theft can request that a 90-day fraud alert be placed on their credit report for free — victims can opt for an extended fraud alert that expires after seven years. The three credit reporting agencies will share the fraud alert with each other, so you only have to contact one agency to add alerts to all three credit reports. Yet unlike a credit freeze, a fraud alert doesn’t prevent the credit reporting agency from releasing your credit report or score to a lender. The fraud alert is simply that — an alert on your credit report that says you may have been a victim of fraud.

If you decide to set credit freezes with the three credit reporting agencies, hang on to your paperwork. Lose the PIN that’s issued to you for identity verification, and removing the freeze could get even more cumbersome and costly.

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