Placing a security freeze on your credit report is one of the ways you can reduce credit card fraud and identity theft. With a security freeze in place, businesses can’t check your credit report to approve credit-based applications. So, if a business isn’t able to assess your creditworthiness, most fraudulent applications will be turned down. Credit freezes, however, shouldn't be used across the board for everyone who wants to avoid identity theft.

Unless you’re identity theft victim, and you can prove it with a valid police report, you’ll have to pay for a security freeze to be placed on your credit report. In some states, consumers over age 65 can also freeze their credit reports for free. Other than that, fees to freeze your credit report range from $3 to $12 per credit bureau depending on your state. That means you’ll pay anywhere from $8 to $36 to freeze all three of your credit reports.

Freezing your credit report doesn’t just keep out would-be identity thieves. It also makes it harder for you to apply for credit. When you’re ready to apply for a credit card or loan, you’ll have to contact the credit bureaus during business hours to temporarily lift the security freeze. It may take a few days to left the security freeze, so you can’t apply for credit impulsively. You’ll have to plan ahead.

Unfreezing your credit report is free in some states if you’ve been an identity theft victim. Otherwise, the fee to lift the security freeze is similar to what you’d pay to add the freeze. And when you’re ready to remove the freeze permanently, there’s a fee for that too.

Freezing your credit report may not stop all cases of identity theft. For example, a business may grant credit without checking your credit report. Or, identity theft can occur during the window of time that you’ve temporarily left the freeze on your credit report. And it won’t stop types of identity theft that don’t require a credit check, like tax or medical identity theft.

That said, adding a security freeze to your credit report might be beneficial if your personal information, like your social security number, has been compromised. The freeze will probably be free, but make sure you get a police report first. Fees associated with temporary lifts will also likely be waived. The only downside is the hassle involved with lifting the freeze if you need to put in a credit card or loan application.

You could also use a credit freeze to keep yourself from applying for credit impulsively. You can’t get any instant approval credit cards, a credit freeze can help until you’ve developed the self-discipline to not apply for credit cards you don’t need.

A fraud alert, also free, is a less restrictive way to protect your credit. Businesses can still check your credit report, but they’re alerted to take extra steps to confirm your identity before they grant credit. Most thieves will have a harder time getting credit in your name, but you’ll still be able to get credit. The fraud alert expires on its own and there's no fee necessary to have it lifted.

Source: Equifax.com