Credit Freezes Offer Limited Protection Against Identity Theft

Credit freezes are a common tool for preventing unauthorized credit accounts, but they do not address all forms of identity theft. Many types of fraud can still occur even when a credit freeze is in place.

When a credit freeze is active, access to a person’s credit report at the major credit bureaus—Equifax, Experian, and TransUnion—is restricted. This measure is designed to stop most new credit accounts from being opened in someone else’s name, providing a layer of defense against certain types of financial fraud.

Despite this protection, credit freezes do not prevent identity theft that does not require a credit inquiry. Criminals can still commit fraud by taking over existing accounts, filing fraudulent tax returns, or using stolen information to obtain government benefits or medical services. These activities do not involve a credit check and are not blocked by a credit freeze.

Account takeover fraud occurs when unauthorized individuals gain access to existing accounts and make changes or unauthorized charges. Similarly, tax identity theft can happen when someone files a tax return using another person’s Social Security number, which does not require a credit report review.

What the numbers show

• Placing, lifting, or removing a credit freeze is free under federal law
• Credit freezes restrict access to credit reports at Equifax, Experian, and TransUnion
• Some lenders may use alternative credit reporting agencies not affected by freezes

Fraud involving employment records, government benefits, or medical identity can also occur without a credit inquiry. Victims of these types of identity theft must contact agencies such as the IRS, Social Security Administration, state benefit offices, or medical providers to address fraudulent activity and correct records.

Credit freezes do not protect existing accounts from unauthorized use or fraudulent activity. Additionally, they do not stop prescreened credit offers, which require a separate opt-out process for consumers who wish to avoid them.

Some lenders, including certain payday loan companies, may rely on alternative credit reporting agencies that are not impacted by standard credit freezes. This means that a freeze at the major bureaus may not prevent all types of new credit accounts from being opened.

Comprehensive identity protection often includes credit monitoring, alerts for new credit inquiries or accounts, and surveillance of exposed personal information such as Social Security or driver’s license numbers. Some identity protection services also provide assistance with fraud resolution and insurance to help cover recovery costs.

Credit freezes do not affect a person’s credit score, and individuals can still access their own credit reports while a freeze is in place. However, relying solely on a credit freeze does not address all the risks associated with identity theft.

* This article is based on publicly available information at the time of writing.