This winter, your credit should also be frozen

Before you tackle noble financial resolutions, such as repaying your debts this year, give yourself a quick favor and freeze your credit records. It's free, does not affect your credit score and protects your financial future.

The credit reports summarize the history of your payments with creditors and are generated automatically by the three major credit reporting agencies: Equifax, Experian and TransUnion. Their freeze prevents fraudsters from opening a new line of credit using your personal information.

Data breaches may seem like an annoying fact, but the Equifax breach in 2017 greatly increased the likelihood that your personal information will be disclosed, while waiting for misuse.

"The data breach by Equifax has revealed the critical financial information of more than half of the US adult population," said Chi Chi Wu, a lawyer at the National Consumer Law Center, a nonprofit advocacy organization. The data presented includes social security numbers, names, dates of birth, addresses and some driver's licenses.

If Equifax's offense or any other person has put your information in the hands of crooks, they could obtain a credit card or loan in your name, accumulate debts and destroy your credit.

Why should you freeze your credit?

Choosing whether to place a credit freeze depends on how you think your personal information is exposed. You can ignore it and hope that nothing bad will happen or act now to avoid the damage.

In a world where data breaches are common, freezes are not a luxury, but a necessity. It is better to protect your credit as soon as possible.

Think about it by adding a deadbolt to your doorway. You hope that no one will be able to cross your existing lock, just as you hope that personal data such as your social security number will remain confidential. But by adding the deadbolt, you have an extra layer of protection in case the first lock is chosen.

How does free credit freeze?

The process of placing a freeze differs slightly from one credit bureau to the other, but you can do it online or over the phone. The freeze then prevents lenders from accessing your credit reports. If a bad actor applies for credit on your behalf, the lender can not view your reports to make a loan decision and does not approve the claim.

When you want to apply for a credit, you release one or more of your reports by logging into your account. (Experian gives you a special PIN code to unlock the report). "It's something you can do with your phone even when you enter your lender's office," says John Ulzheimer, a credit expert who worked for Equifax and the FICO rating company. You can also set a period of time to temporarily lift the freeze, for example when shopping for a mortgage, Wu explains.

Your credit score – the three-digit number based on the information contained in your credit reports – is not affected. (You can check your own credit reports without impacting your score, whether you have a gel or not.)

Freezing and unlocking your credit reports is now free, thanks to the measures taken by Congress after the Equifax breach. Parents also have the right to create credit reports for their minor children and freeze them for free, says Ulzheimer. Freezing your children's credit protects them from identity theft.

What does a credit freeze do not do

Protect yourself against certain forms of identity theft: A freeze prevents the opening of a new credit, but if someone has details of your existing credit card, it is possible that it generates fraudulent fees. If they have your social security number, they could file a false tax return or claim social security benefits on your behalf. It's always essential to monitor your credit card transactions and other financial accounts and immediately report suspicion of identity theft, Wu said.

Prevent existing creditors from seeing your reports: Lenders with whom you already have a relationship can still see your credit reports. Collection agents can also access it.

Stay alert

It's a good idea to check your credit report and credit score regularly so you can react quickly if you notice an anomaly.

Many personal finance websites, banks and credit card issuers offer a way to check your credit. Look for one that offers both information about your credit score and your credit report, which it updates regularly and which is free.

This article was written by NerdWallet and was originally published by The Associated Press.

The article This winter, your credit should be frozen, too was originally appeared on NerdWallet.