If My Credit Card Is Frozen, Will it Affect My Credit Score?

Handing your credit card to the waiter at the restaurant, only to be told moments later that it doesn't go through, is an unpleasant and embarrassing situation. If your credit card is locked because you failed to make minimum payments, your credit score may naturally be effected. On the other hand, a "credit freeze" is a wholly different concept with very different consequences.

Default

If you fail to pay your credit card bills on time, your financial institution will of course stop honoring your charge requests, even if your outstanding balance is well below your total line of credit. Credit card issuers will usually give you some time to make an overdue payment, usually weeks rather than days, before they will either inform a credit rating agency or decline payments through your credit cards.

While this situation is usually referred to as a credit card being "locked" as opposed to a "freeze," there is no universally accepted term to define this situation, which can lead to confusion. The bottom line, however, is that your inability or lack of willingness to pay your credit card bills will result in the issuer eventually putting a hold on your card and will negatively impact your credit score.

Fraud Investigation

If warranted, you can also ask your financial institution to stop honoring payments to a specific company or to all merchants while a fraud is investigated. If you suspect or have proof that someone stole your credit card information, this may be a prudent temporary solution. Such a "freeze" will not affect your credit score.

Cancelation

If what is meant by a "freeze" is a simple cancellation of a credit card account or one of the several credit cards in a joint account, such a move may or may not impact your credit score. Since agencies do take your total outstanding line of credit into account when calculating your credit score, a reduction in your line of available credit could negatively influence your credit score. The formulas for these calculations are complex and proprietary, however, and if the resulting decline in your line of credit is deemed inconsequential, your score may not move.

Credit Freeze

Finally, a credit freeze is much different from putting a hold on a particular credit card and involves making your entire credit history inaccessible to all merchants for a specific period of time. By contacting credit rating agencies, you can prevent anyone obtaining new lines of credit under your name or checking your credit score. This is often done if you suspect that an individual or criminal organization has gained access to a large amount of your personal data and could fraudulently apply for new lines of credit under your name. A credit freeze is free if your application is accompanied by a police report, but subject to a small fee without such a report. Such a freeze will not impact your credit report, but do keep in mind that all of your applications for credit, whether in the form of a car loan, mortgage or a new credit card, will likely be declined while the freeze is in effect. Merchants who cannot see your credit history will almost certainly decline to provide you with a line of credit.