What does a Credit Freeze do?

A credit freeze is a powerful tool that restricts access to a borrower's credit report. When a credit freeze is activated, it prevents lenders and credit reporting agencies from accessing the borrower's credit file. This is primarily designed as a security measure to protect individuals from identity theft and fraudulent activities.

By freezing their credit, consumers can ensure that even if someone obtains their personal information, that person will not be able to open new credit accounts in their name since the lender will not be able to access their credit report. This makes it an effective way to safeguard one’s credit profile by blocking unauthorized access.

The other options touch on misconceptions about what a credit freeze entails. Unlimited access to credit accounts would undermine the purpose of a credit freeze, which is to limit access to sensitive financial information. Similarly, the idea that a credit freeze reduces credit limits or pays bills for the borrower misrepresents its function; a credit freeze does not manipulate existing financial arrangements but simply restricts access to credit information.