Does Freezing Credit Card Affect Score?

What Happens When You Freeze Credit Cards: Does It Hurt Your Credit?

Credit card freezing is another preventive measure that consumers can employ to ensure that no new credit accounts are opened in their name. However, some people get concerned if freezing credit cards affect your credit rating or even the use of existing credit. This article will look at how credit freeze works, who should freeze their credit, the effect on credit scores, and how to use credit cards when you have a freeze.

The process of credit card freeze is explained below.

The lock makes it impossible for any lender to access the credit report and open a new credit line with the customer. This assists in preventing identity thieves from making fake accounts on your credit. To freeze, you need to reach out to the three main credit bureaus which are Equifax, Experian, and TransUnion. A freeze is a permanent state until you choose to unfreeze it, either partially or fully, though, in certain states, a freeze automatically dissolves after 7 years.

Who Should Freeze Their Credit?

Any individual who would like to protect himself from identity theft can easily file for a credit freeze and it is more advisable for those people who have no intention of applying for new credit accounts shortly. For instance, freezing is most applicable to the vulnerable such as children, elderly parents, and those who are not frequently utilizing credit. The victims of identity theft are required to place a freeze to avoid any more instances of fraud.

What Is the Impact of Freezing Your Credit Card on Your Credit Score?

That is, merely putting your credit report on freeze to prevent new credit account generation does not affect the score per se. However, as long as your credit card accounts remain open and have no negative activity, the freeze itself will not affect your score. That is why your credit score is reflective of your credit history and your ability to manage credit responsibly.

However, there are a few indirect ways that freezing credit can impact your score.

• Limited access to credit reports – Credit reporting is also useful when a lender wants to know whether more credit should be granted to an account. If they can’t get to your report because of a freeze, they may be less likely to increase your credit limit. This can be very disadvantageous because the credit utilization ratio is a significant component of the total credit score.
• New credit after lift freeze – Whenever you open new credit every time you sometimes lift your freeze, there will be an inquiry on the credit report. Multiple credit inquiries from loan or card applications can be seen as a higher risk for lenders and will cause a minor drop in your credit score.
• Lack of credit history – Because of the permanent ‘ freeze’, the process of building a credit history over several years can be hampered. Few accounts of credit history tend to give a person lower scores than having a rich account that shows many active accounts for a long time.

Can I continue using my credit cards even if my credit is frozen?

A credit freeze does not impact the ability to use credit cards and loans that are already active. You can continue to make your payments on time and ensure that the balances are not too high, and there should not be any changes in the terms, features, rates, or incentives offered on your accounts. Credit freezes can only prevent new accounts from being opened as opposed to the usage as well as management of the lines of credit you already have. You can keep on charging expenses to your open credit cards without any problem.

However, some card issuers may reduce your spending limits occasionally if you don’t provide them with your updated credit report for them to continuously assess your creditworthiness. Squeezing a large portion of suddenly reduced limits could be detrimental to your credit score because it increases your utilization ratio. Some changes might be implemented on a case-by-case basis, so it is advisable to check the specific policies of the card issuer.

It is also advisable to frequently check the current limits if one intends to make large purchases that may be near the full limit offered by the issuers. Some lenders will be willing to negotiate with you regarding timing for a temporary credit freeze just long enough to confirm your details and potentially increase your credit limit.

The Bottom Line

Freezing credit does not automatically affect the credit score and enables the use of open credit cards with proper utilization. There are possibilities of indirect effects in the long run but freezing is a perfect method to put use identity protection for those who are wary of fraud and theft. It is necessary to pay close attention to your credit activity looking for any unauthorized changes, and learn how to properly thaw your timeline when necessary.

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