Freezing your credit report to manage credit inquiries (or how to get use out of TransUnion)

I currently reside in New Jersey. Hard-core Experian country. Amex, Chase and Citi always pull Experian for credit card applications. Bank of America, Barclays, Capital One and US Bank sometimes pull Equifax or, rarely, TransUnion.

I learned this the hard way about 2 quarters into my NJ residency when I suddenly had a ton of inquiries on my Experian report and nothing elsewhere, making it difficult to get new credit cards.

So I began searching finance forums and asking the experts what to do, coming across the freeze method.

Each of the major credit bureaus have a Security Center where you can place a security freeze:

• Experian Security Center
• Equifax Security Center
• TransUnion Security Center

The rules vary by state of your residency. Generally it is free to place a freeze, and then minimal cost to remove a freeze either temporarily or permanently. In my case, Experian is $4.95 to temporarily or permanently remove the freeze.

You can also request, for free, a one-time use pin to allow access to your report.

So I froze Experian and decided to let it sit for 1 year, no excuses, no matter how good the offer.

When applying for a credit card, if an attempt to pull the frozen report is made, you do not receive any special notification from the credit card company or the credit bureau. You typically get a “needs more processing” or “additional review” message.

You can then immediately call the credit card company reconsideration line, the agent will typically say something like, “We could not access your credit report, is there a security freeze on it?”

I do not give any explanation, I just say something like, “Oh yes, my Experian is frozen, could you pull a different report/Equifax/TransUnion?” No one has ever asked me for more detail.

From my experience and others, Amex and Citi do not agree to pull other reports, if they want a specific report, they want that report. Your option is to give up or get a free, single-use, temporary pin from the security center, and give it to the agent. This is good for that great offer you can’t pass up, but does preclude auto-approval for applications that you prefer to not call attention to, such as multiple applications for the same card. I used a pin this past August for the Starwood Amex 30k offer, which was in the 13th-month of my freeze.

Chase and Bank of America I have the most experience with and their agents have always agreed to pull alternate reports. Other credit card companies have initially pulled my non-Experian reports so have not been an issue.

What does this accomplish?

By pulling other reports, credit card companies will still see all your outstanding accounts, loans, etc, so your credit must be good. They just won’t see all the credit inquiries from other reports, and many systems flag multiple recent inquiries. This also means the impact to your credit score of inquiries will be spread among reports. My Experian score is still 20-30 points lower than my other reports, but was 40-50 when I started the freeze a year ago.

I have seen reports of people determined to force TransUnion but freezing both Experian and Equifax. I have not bothered since I have gotten a good mix of both.

Is this ethical?

I do not see any ethical concern. There is no requirement that you meet specific criteria for a free, Equifax describes it:

You may place, temporarily lift or remove a security freeze on your Equifax credit file under state law or the Equifax voluntary security freeze program. A security freeze is designed to prevent the information in your Equifax credit file from being reported to others, such as credit grantors and other companies, except those exempted by law or those for whom you contacted us and requested that we temporarily lift the security freeze or those that access during a period of time when you requested we temporarily lift the security freeze.

I would not misrepresent to a credit card company why I have the freeze, but as noted above, they have never asked why I have a freeze.

There are, however, ways, differing by state, to get free security freeze services by claiming to be a victim of identify theft. It would be quite unethical, and open to legal liability, to try this as it typically requires a law enforcement agency report as evidence. That would be really stupid to try to save $4.95.

Next…

Next post I will illustrate how I used my Experian freeze in my recent ‘11 approved, 2 pending‘ applications.