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Credit Freeze: All You Need To Know

Credit Freeze

A credit freeze is something you can put in place to limit others from viewing your credit reports, including lenders. Freezing your credit is an extreme step, but it’s something that might be necessary if you’re dealing with identity theft and other measures, such as fraud alerts.

Pros And Cons Of Credit Freeze

Now that you know what does it mean when you freeze your credit let us check out the credit freeze pros and cons. A credit freeze is the most efficient way to avoid the opening of unauthorized accounts under your name, and since it’s free to do so, if you believe your identity has been hacked, you should absolutely do it.

Although a freeze will prevent anyone from taking your identification and manipulating your credit records, while in effect, it will also prohibit you from opening a new account. Another downside is that to both freeze and unfreeze the credit, you would have to personally call each agency, which is tedious for those with busy schedules. Additionally, on your existing accounts, a credit freeze would not deter or warn you regarding fraud. If you lose or miss the special PIN that you were issued during the original credit freeze, you will have to unfreeze and refreeze your account every time you try to apply for new credit. 

Things To Keep In Mind Before You Freeze Your Credit

As we said, a credit freeze stops most lenders and service providers from obtaining your credit report, you will have to lift the freeze before making any applications for new credit. Freezing your credit report simply as a preventive measure may cause undue inconvenience. Before you request a credit freeze, there are some things to keep in mind and alternatives to look into.

credit freeze

The process of freezing and unfreezing your credit can be done in a few minutes with each credit reporting agency, but that doesn’t mean it’s an action to be taken lightly. Here’s all you need to know about credit freeze:

Understand What Is The Concept Of Credit Freeze 

A credit freeze is a tool consumers can use to help protect themselves against credit fraud. When you freeze your credit reports, most companies are blocked from viewing them until you “thaw” the freeze.

When lenders can’t view your credit score on the report, they can’t extend credit. This means that if someone has managed to steal your Social Security number and other personal information, they won’t be able to open fraudulent credit accounts in your name. That said, it will also make it impossible for you to get approved for credit unless you lift it temporarily or permanently.

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Know The Complete Credit Freeze Process

You’ll need to file a credit freeze request with all three major credit bureaus for it to be effective. During the process, you’ll need to answer a handful of questions to verify your identity.

You’ll also need to provide your Social Security number, a copy of a photo ID, and proof of residence, such as a recent utility bill. Depending on the bureau, you may get a PIN you can use to freeze and unfreeze your report in the future.

If you plan to apply for credit with a security freeze on your credit reports, you’ll need to lift the freezes, either temporarily or permanently, before you apply to ensure the lender can view your reports during its credit check.

You Don’t Need To Pay Anything To Freeze Your Credit

There is no fee associated with freezing or thawing your credit. A few years back, credit freezes carried fees that varied by state.

It’s also free regardless of whether you’ve been a victim of identity theft. In the past, victims of identity theft may have had their fees waived, but now credit freezes are available for free to everyone.

A Freeze Doesn’t Protect Everything

A credit freeze can prevent someone from committing credit fraud by opening a credit account in your name without your permission. It can’t, however, protect you from having your identity stolen. A CF has never prevented identity theft. Its purpose is to prevent the use of your stolen identity to commit fraud against you.

If someone steals your credit card number, they can still use your credit account to make unauthorized purchases. Also, if someone steals your Social Security number, a credit freeze won’t prevent them from filing fraudulent tax returns and health insurance claims in your name.

As a result, it’s important to remain vigilant in other areas of your financial life, especially if you’re certain that someone has stolen your personal information.

At Times, You May Experience Credit Delays

Freezes can create delays and problems when access to your credit reports is needed quickly. This can happen when you apply for a loan or credit card; however, if you are applying for a job, trying to rent an apartment, or applying for insurance, a CF will not impact you.

Companies typically won’t extend credit if one or more of your credit reports are frozen. Also, even with a fast turnaround time, freezing or unfreezing your credit can cause delays if you forget to thaw your credit before you apply for something that requires a credit check. Delays can also result if you forget or lose your required PIN or password and need to work with a bureau to recover it. You can avoid these delays by thinking ahead and lifting your CF before you apply for a loan, credit card, lease, or insurance policy.

Keep Exploring Other Options

Freezing your credit usually isn’t necessary if you’ve never been a victim of identity theft or fraud. If you think your information has been compromised, a fraud alert may be sufficient. It will let lenders know to verify the applicant before opening a new account, while still allowing you to access credit when you need it. The exception is instant credit because lenders take extra steps to verify your identity when you have a fraud alert on file, you may find that you won’t be able to be approved for credit instantly in stores.

Deciding between a fraud alert and a CF is up to you. A fraud alert is better if you’re concerned your information may have been compromised but don’t yet have evidence of fraud, or if you want to protect yourself but intend to apply for credit soon and don’t want to deal with freezing and unfreezing your credit.

How Can You Freeze Your Credit?

Getting your credit frozen is not complicated, it will only take some time. All that you need to do is call the three big credit bureaus and apply to freeze your credit. You may reach them via call, fax, e-mail, or mailing address.

Next, you’ll set up a CF that prohibits anyone from reading your credit report. The PIN covers the frozen credit, and no one can access frozen credit without that PIN. You may apply a freeze on your account within one business day. If you request it through the mail, you have to wait three business days for the freeze to fall into force.

How Can You Unfreeze Your Credit?

To unfreeze your credit record, simply let the credit bureaus know you are no longer attempting to block access to your account. There’s even an option to lift the freeze temporarily if you want to apply for something that needs a credit check. Be mindful, though, that the credit report can take up to seven days to “thaw” so that creditors can see it again. I realize it is a hassle to keep calling each credit bureau every time anyone wants access to your credit report, but it is less of a hassle than making anyone attempt to take out a loan on your behalf.

If a prospective employer wants a credit report when you’re interviewing for a position, you can always ask them which credit bureau they can search through so you don’t have to contact all three.

If you liked reading this blog on credit freeze and everything you need to know about it, then make sure you check out our other informative blogs linked below!

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Credit Freeze

Credit Freeze: All You Need To Know

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