How to freeze your credit

There are times when small business owners need to go through personal credit inquiries to be approved for business credit cards or business loans. This is much more common in the early stages of your company, when you’re still building your business credit profile. However, lenders may also check your personal credit later in your company’s life when they want personal accountability.

Using a personal credit profile to build business credit can benefit an individual, but it can also be a security risk. Every application, credit inquiry, and new credit account leaves you open to identity theft, fraudulent charges, and the opening of fake accounts under your name. Credit freezes are a way you can avoid all that.

What’s a credit freeze?

Credit freezes can only be done on personal credit, not business credit. To be effective, a credit freeze needs to be initiated with all three major consumer credit bureaus, which are Experian, Equifax, and TransUnion. None of them charge to put a credit freeze on your account, so you don’t need to worry about fees. The freeze will last until you remove it.

The purpose of a credit freeze is to prevent anyone, including yourself, from opening new credit accounts under your name. It also blocks access to your credit report. That includes blocking credit checks from prospective creditors, landlords, potential employers, insurance companies, and rental agencies.    

Adding fraud alerts to a credit freeze will help you detect unwanted activity. A simple fraud alert, or an “initial security alert,” lasts 90 days and generates a credit bureau identification check for anyone seeking credit in your name. Using this alert with a credit freeze can help stop fraud and may even help you locate the fraudster.  

An “extended fraud victim statement” is another fraud alert that can stay on your credit report for up to seven years. There are also “active-duty fraud alerts,” which are designed for military personnel who want to freeze and monitor their credit while they’re deployed. Sadly, some unscrupulous individuals try to take advantage of active-duty military.      

Can I freeze my business credit?

You can’t freeze your business credit, but you can place a fraud alert on your business credit cards or business bank accounts. This can be done through the credit provider or directly through your bank. Most financial institutions that offer business checking accounts have some type of fraud protection program in place.

Why should you freeze your credit?

A credit freeze is a proactive measure for protecting against identity theft and data breaches. Credit freezes only prevent the opening of new accounts. They don’t affect your ability to build or lose credit with existing accounts. They also don’t protect you from fraudulent activity, so it’s best to use fraud alerts to keep your accounts safe.

How to freeze your personal credit

Remember that you can only freeze personal credit, not business credit. To do that, you’ll need to contact each of the three consumer credit bureaus. Their contact info is below:

When should you unfreeze your credit?

It can be useful to keep your credit frozen indefinitely, but there are some circumstances when a temporary thaw is necessary. Common examples of this include opening a new line of credit for your business or allowing prospective renters to view your credit report when you’re moving. Ask which bureau they’ll check so you don’t have to unfreeze all three.   

How freezing your personal credit can help protect your business credit

Freezing your personal credit can protect your business credit because the two are tied together. Banks want your Social Security number on a business loan form. Landlords need a personal point of accountability. Business credit cards need someone to be the signer. Protecting your personal credit can help you manage these essential business functions. Freezing credit helps prevent fraud that could hurt your business.