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Freezing his credit helps this expert 'sleep better' at night—here's why he says everyone should do it
CNBC Select speaks to an expert whose credit has been frozen off and on for years — plus why and when it's smart for you do the same, global pandemic or not.
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As anxiety about the coronavirus pandemic builds, experts have warned Americans to be wary of credit card scammers.
If you're one of the many consumers experiencing financial hardship at this time, the last thing you want is a fraudster having access to your money. An easy way to protect yourself is by putting your credit on freeze if you know you aren't going to apply for a new card or loan anytime soon.
"The freeze is kind of like putting your credit in a safe and you have the key," Jim Droske, president of the credit counseling company Illinois Credit Services tells CNBC Select. "If you don't need your credit, keep it in the safest place you can until you do need it."
Below, we speak to Droske about why freezing your credit is a smart idea for everyone, no matter your credit score, in a global pandemic or not.
Why Droske always keeps his credit frozen
"My personal credit has been frozen off and on for years," Droske, who maintains a perfect credit score, explains.
Credit freezes take little time to set up, come at zero cost and are a smart way to protect unauthorized access to your credit report. When your credit is frozen, fraudsters are unable to open new accounts in your name, even if they have your personal information. In fact, no third party can access your credit when it is frozen.
"It's the most secure thing you can do to protect your credit," Droske says. "I recommend keeping it frozen until you need to use it. Let's face it, you know when you are going to apply for a mortgage, auto loan or credit card, so keep your credit frozen until you need it." Individuals can still access their credit report when frozen, but they can't apply for any new credit.
Keep in mind that this does not apply to any bank that you already have existing relationships with. For example, if you currently have the Chase Freedom® or Chase Sapphire Preferred® Card and ask for a credit limit increase, Chase can still look at your credit report to decide whether or not to approve it.
It's easy to do a 'temporary lift' or 'thaw' your credit
Credit freezes only take about 30 to 45 minutes to set up with all three credit bureaus (Experian, Equifax and TransUnion) and they are easy and free to unfreeze when you need to, such as when applying for a new mortgage, loan or other credit. To unfreeze your credit, place a call to the bureaus or do it on their websites. The process happens quickly and there should be no extended time period to wait for the 'temporary lift' to process.
"I was at a car dealership to purchase a car and I forgot my credit was frozen," Droske says. "It took me about two minutes to thaw the reports and the dealership could then access my credit."
And keep in mind that you don't always have to thaw all three reports when you want to buy something. "You can ask the lender which report they are going to pull, then 'thaw' ('temporary lift') just that one report," Droske says.
Once you unfreeze your credit, you can request how long you want it to be accessible. For example, you can request that your credit be available for one day, a week or three months. Just make sure you freeze it again after the loan is issued if you want to stay protected.
Whether you have good credit or bad credit, you should still freeze it
Freezing your credit is important for both people with good credit and not-so-good credit.
"Unfortunately, we live in a world where fraudsters prowl, data breaches are rampant, and there is a ton of our information available out there," Droske says. "Why not take control of it? If you have good credit, why worry about it? Freeze it."
But if you're someone with less than stellar credit, you may not be so worried about a fraudster using your credit since it would be more difficult to obtain loan approvals. Even so, you may still want to think about freezing it.
When you're offered extensions of credit that don't have favorable terms or you're inclined to make impulse purchases, having your credit frozen helps control that. In these scenarios, if your credit is not as easy for you to access, you are better protected from following through with these decisions.
"Remember, you can always thaw your credit and complete the application, but when you have to take an extra step to do that, you may rethink the terms and even the purchase itself," Droske says.
Know that a credit freeze does not impact your credit score and you can still use your credit cards as normal if your credit is frozen.
If you're any bit worried about fraudsters having access to your credit, freeze it. You can always lift it to apply for new credit and then freeze it again.
Droske recommends that everyone try this, no matter your current credit situation. The only exception would be if you are someone who is trying to rebuild or establish credit and know you will soon be applying.
"It's a small inconvenience of a little effort and zero cost, but high levels of protection," Droske says. "I sleep better knowing that no unauthorized third party can access my credit until I say so."
Information about the Chase Freedom® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.