Man freezing his credit
@Lesia.Valentain/Twenty20

You no longer have to pay to freeze your credit.

On Sept. 21, laws passed in May went into effect requiring each of the three major credit bureaus to freeze consumers’ credit free of charge.

Credit freezes help Americans combat identity theft and other forms of fraud. They block outside parties from viewing your credit score, which prohibits would-be identity thieves from opening an account with your data. But how do you know when to freeze your credit? And what are your other options?

Here are some options for freezing and additional ways to stay protected.

Reasons to freeze your credit

The purpose of a credit freeze is fraud prevention. If you’re worried someone may be looking to steal your identity, or just want to take extra precaution, freezing your credit is a great way to be proactive.

Implementing a freeze “locks down the credit report, which makes it harder for others to open up accounts in your name or to obtain a copy of your credit report to look at details of accounts you may already have open so that they can commit various crimes,” says Bruce McClary, vice president of communications for the National Foundation for Credit Counseling (NFCC).

Just make sure you hold on to your PIN so you can easily thaw your credit in the future.

When to skip a credit freeze

If you’re considering a freeze, think about your overall financial activity first. There are some times in your life when a freeze may set back other priorities.

If you’re thinking about buying a house or a car, you’ll have to lift the freeze to apply for a mortgage or auto loan. Your application for a new credit card, too, can be delayed by a freeze.

Thanks to the new federal law, undoing a freeze that’s already in place is simple.

“You can release the freeze for a period of time, and then go back and refreeze after the creditor has been able to access your credit report for the purpose of approving the loan,” McClary says.

Don’t forget, the process involves contacting each of the three credit bureaus (Experian, Equifax and TransUnion) separately by phone, web or mail to both implement and lift the freeze.

Alternatives to a credit freeze

It’s important to remember that a freeze cannot guarantee protection.

“Do not ever think that a credit freeze is fool-proof immunity from identity theft or credit fraud, because it isn’t,” McClary says. “So credit monitoring is still something that people could consider as an additional layer of security above the freeze.”

There are a few ways that you can monitor your credit, either in place of or in addition to a freeze.

First, simply monitor your own accounts. Regularly check your credit card balances, your bank statements and your credit score to stay on top of any shady activity. Sign up for alerts with your credit card companies and financial institutions to be notified about any suspected fraudulent activity. You can also view your own credit report for free every year from each of the three credit bureaus. You can also get your free credit report and score from Bankrate.

Another option is paying for a credit monitoring service. Because you can pull your report only once every 12 months, hiring an agency to alert you of any suspicious activity can provide that extra sense of reassurance.

Either way, “reacting quickly is really the key to effectively addressing any issues of identity theft before they become bigger problems, before there’s more collateral damage that’s caused on your credit file and ultimately impacting your credit score,” McClary says.

Credit score implications

Freezing your credit doesn’t impact your credit score, McClary says.

The only impact you may face from a freeze, no matter how long it’s been in place, is slowing down the approval process if you forget to lift the freeze before applying for a loan or line of credit.

Ultimately, it’s important to evaluate your own habits and what makes you feel safest.

“The most effective way to keep people from accessing your credit report at times when they don’t have authorization is to place a freeze on your credit report,” he says. “It is good to have that in place anytime that you’re not out actively applying for credit. Just set it up and leave it.”