The downside of credit freezes

If you're concerned about identity thieves ruining your credit, you've probably considered putting your credit report on ice. A credit freeze prevents anyone who obtains your Social Security number or other personal information by nefarious means from opening credit accounts in your name. But freezing your files also inconveniences you. While the freeze is on, no one—not even you—can open an account in your name. Companies and individuals you want to do business with, including lenders, prospective employers, landlords, and utilities, will not be able to evaluate your credit.

You can have the freeze lifted, or "thawed," to let people peek at your info, but that can take time. Say, for example, you want to apply for a store credit card to save 10 percent on a digital camera you're about to buy. Some states require credit bureaus to lift the freeze in as little as 15 minutes—which is fine if you also planned to look at tripods and camera bags—but it can take days in other places. And depending on your state and circumstances, freezing, temporarily unfreezing, or permanently removing the freeze can cost you nothing or require a fee of $3 to $20. To learn your state's law, go to Consumers Union's Guide to Security Freeze Protection. If your state is not listed because it's one of the handful without a freeze law, you can contact the three credit-reporting agencies—Equifax, Experian, and TransUnion—directly and each one will freeze your file for $10. (There is no charge if you've been the victim of ID theft.)

A freeze won't block access to your report by a company you already do business with, certain government agencies, and other exempt entities, including insurers in some states. And a freeze won't prevent creditors from placing negative information in your file, such as late payments. It also won't protect your existing accounts from being pillaged.

What to do. If you suspect that someone has stolen your personal information, initiate a freeze at all three credit agencies. If that isn't the case, and you're about to apply for a loan, a job, or anything else that requires access to your credit report, you might wait before initiating a freeze. If you wish to temporarily lift a freeze, allow enough time to make sure any companies you want to do business with won't be blocked. And remember: Even if your files are frozen, you still need to check them at least once a year for suspicious activity.—Anthony Giorgianni