When news of a data breach surfaces, the term "credit freeze" tends to pop up, too. It makes sense: A credit freeze restricts access to your credit reports and may help protect you from identity theft. A credit freeze stops anyone from opening new accounts in your name. However, beyond preventing hard credit checks – which happen when you open a new account and can cause your score to drop by a few points temporarily – a credit freeze doesn’t impact your credit score.
While credit freezes can help prevent fraud, they can be inconvenient. You must unfreeze (or thaw) your credit to apply for new credit.
Let’s look at how credit freezes work and why they don’t impact your credit score.
What is a credit freeze?
A credit freeze is a free security measure that can help prevent anyone from opening unauthorized accounts in your name, like loans or credit cards.
Credit freezes limit creditors’ access to your credit reports. However, there are some exceptions to that limitation, and soft credit inquiries (which happen for things like background checks and when you check your own credit and don’t impact your credit score) are still possible.
For example, you’d still be able to access your own credit reports with the 3 major credit bureaus and take advantage of free weekly credit reports. Existing creditors and companies processing non-credit applications that require a credit check (such as apartment and job applications) may still be able to access your credit reports.
Other exceptions may include:
- Debt collectors
- Marketing companies providing pre-screened credit card offers
- Identity verification companies
- Insurance companies (in states that allow credit-based insurance scores)
- Phone providers
Remember: Credit freezes are not the same as fraud alerts. Fraud alerts require creditors to verify your identity or contact you before opening a new account. You only have to contact 1 major credit bureau to place a fraud alert. They then notify the other 2 credit bureaus.
Why a credit freeze doesn’t affect your credit score
Freezing your credit doesn't impact your credit score or change how your score is calculated. Existing creditors still report your account activity to the credit bureaus as usual.
Your credit score may change over time based on your activity. For example, if you miss a payment, that could still lower your score, while lowering your credit utilization (the percentage of available credit you’re using) could improve it.
Technically, there is one way a credit freeze can keep your score from dropping slightly. Opening a new account typically requires a hard inquiry. A hard inquiry can impact your credit score by a few points for about a year and stay on your credit reports for up to 2 years. However, if your credit is frozen, hard inquiries are not possible, so, any hard inquires can’t happen and thus can’t impact your credit score.
How long do credit freezes last?
Credit freezes have no time limit. Once you set one up, your credit will be frozen until you lift (or “thaw”) the freeze.
Applying for new credit, like the Costco Anywhere Visa® Card by Citi
Frozen credit prevents you from opening a new credit card. For example, if you want to apply for the Costco Anywhere Visa Card by Citi and your credit is frozen, you must first thaw your credit. That means following the consumer credit bureaus’ thawing procedures, which may vary depending on the credit bureau.
