Credit Freeze

Q: How does mortgage debt affect my credit score?

Mortgage debt could help or harm your credit score . Anytime you apply for a new loan, your score is likely to nudge downward for a little bit. Once you have the loan, three things matter: The payment history. This is the most important. Paying late could hurt your credit, and paying on time should have a positive impact. The account age. Credit scores look at the average age of all of your credit accounts. If you got a mortgage 10 years ago and you got a credit card 5 years ago, your average credit age is 7.5 years. Having old credit accounts is better than having new credit accounts. The type of account. A mortgage is an installment loan account. A credit card is a revolving debt account. You get points for showing that you can handle different kinds of credit accounts.

Credit freeze summary:

A credit freeze is a free service from credit bureaus that lets you reduce access to your credit report.
Some companies (such as debt collectors and potential employers) can still view your credit report during a credit freeze, but those views won’t hurt your credit score.
A freeze could help protect you from fraudulent accounts being opened in your name. It also helps put extra steps between you and new credit cards or other credit accounts.

Credit freeze definition and meaning

A credit freeze is an action you can take to cut off access to your credit report. When you decide to use a credit freeze (also called a “security freeze”), you ask credit bureaus to limit access to your credit report.

When your credit is frozen, a potential new creditor can’t check your credit. Most creditors won’t approve a new account without first checking your credit, so a freeze is a good way to thwart identity theft.

Signing up for a credit freeze doesn’t cost you any money. You can get a credit freeze from all three credit reporting bureaus, but you have to ask each bureau separately.

Key concept: A credit freeze can help you prevent identity theft.

Key features of a credit freeze

Here are a few key details of what a credit freeze is and how it works.

A credit freeze is a free service

If you decide that you want to freeze your credit, the credit bureaus will do it for you for free. Some credit bureaus offer paid subscriptions for identity protection services with similar names, such as “credit lock”—but if you only want to shut down access to your credit report, you don’t need to pay. You can get a credit freeze for free.

Freezing your credit is your right under the law

You have the right to get a credit freeze, and credit reporting bureaus are required to give it to you. In the same way that you’re allowed to get one free copy of your credit report per year from all three bureaus, a credit freeze is part of your legal rights as an American consumer.

Freezing your credit doesn’t hurt your credit score

Getting a credit freeze has no impact on your credit score. With a credit freeze, you’re not opening or closing any new credit accounts. And it has nothing to do with whether you’re paying your bills on time or how you’re managing your existing credit accounts.

A credit freeze can be temporarily thawed or lifted

You can thaw or unfreeze your credit anytime. You can even do a temporary thaw where you pause your credit freeze for a day or a few days, apply for a new personal loan or other credit account, and then restart the freeze automatically.

Some companies can still see your credit report when it’s frozen

A credit freeze doesn’t cut off all access to your credit reports. Some creditors and other entities can still access your credit report via a soft credit check during a credit freeze. That includes anyone who has the right to do a soft inquiry, such as your current creditors, landlords, prospective employers, and debt collectors.

Real-life examples of a credit freeze

Here’s when you might want to use a credit freeze.

Help prevent identity theft

Creditors usually won’t approve an application for credit without a credit check. A freeze prevents that credit check, so it’s a good obstacle between thieves and you.

It’s become all too common in recent years—many Americans’ information has been compromised in data breaches. If you receive a letter in the mail notifying you about a data breach, or if you’ve been a victim of identity theft, you might want to use a credit freeze. This could stop criminals from opening new accounts under your name.

Get serious about cutting back on credit

Using a credit freeze can be a way to control your spending by slowing your ability to open more credit accounts. To open a new account, you’d need to first unfreeze your credit.

If it gives you peace of mind and helps you focus on getting out of debt faster and fixing your credit, a credit freeze may help you reach your financial goals.

To ask for a credit freeze, contact all three credit reporting bureaus: Equifax, Experian, and TransUnion. You can set up a credit freeze online, by phone, or by mail.

Credit freeze FAQs

Does DTI affect my credit score?

No, DTI doesn’t affect your credit score because credit scoring models don’t consider your income. However, lower DTI often goes hand in hand with good credit scores because it’s easier to have good payment history and low utilization when you carry less debt.

Does entering a debt management plan affect your credit score?

Enrolling in a debt management plan could affect your credit score if one of the conditions is closing your credit card accounts. Closing credit card accounts that have a balance can negatively affect your credit utilization. Credit utilization measures how much of your available credit you're using and is a major factor in credit scoring.

Being enrolled in the DMP doesn't affect your credit score, but it may be noted in your credit file for other creditors to see.

If you fell behind on your payments before you started a DMP, those late payments could continue to affect your score for seven years, but the negative effect gets smaller over time.

How does mortgage debt affect my credit score?

Mortgage debt could help or harm your credit score. Anytime you apply for a new loan, your score is likely to nudge downward for a little bit. Once you have the loan, three things matter:

The payment history. This is the most important. Paying late could hurt your credit, and paying on time should have a positive impact.

The account age. Credit scores look at the average age of all of your credit accounts. If you got a mortgage 10 years ago and you got a credit card 5 years ago, your average credit age is 7.5 years. Having old credit accounts is better than having new credit accounts.

The type of account. A mortgage is an installment loan account. A credit card is a revolving debt account. You get points for showing that you can handle different kinds of credit accounts.