If you've ever handled packaged shredded cheese, you've probably noticed some brands can leave an almost powdery residue on your fingers. This comes from the cellulose powder that's added to the shredded cheese to keep it from sticking together or melting in transit to the grocery store. So, while shredded cheese will melt in a crockpot, freshly cubed or grated is preferable. In a pinch, you could use pre-shredded cheese, but keep an eye on it and add milk if needed to keep the dip from getting stringy.