If you want to restrict others from viewing your credit report, a credit freeze is the right step. While this is an extreme step, it is necessary in some cases, for instance, when there is identity theft that you are trying to correct.
Since credit freeze prevents all access to your credit report (by service providers and lenders), lifting such credit is essential before you make an application for new credit. The process can result in some inconvenience, which makes it necessary to keep some things in mind before going ahead with the process:
Understand what a Credit Freeze is
A credit freeze is a tool consumers can use to keep themselves from credit fraud. Most companies will not be able to view your credit report until you unfreeze it.
Inability to view your credit report means no credit extension. As a result, should anyone steal your personal info, including your SSN, opening a fraudulent credit account in your name will be impossible.
In addition, the action will also make approval for credit impossible, except the freeze is lifted.
Know about the Credit Freezing Process
You will have to file a freeze request with the three major credit bureaus to freeze your credit. For the process to be effective, one needs to answer some questions during the process.
In addition, one needs to supply the SSN, proof of residence like a utility bill, and a copy of an ID. You might be offered a PIN that will allow you to freeze or unfreeze the report.
However, lifting the freeze is essential when you apply for credit on your credit report, which might be permanent or temporal before application. This will help lenders view your report for a credit check.
Freezing Credit is Free
Freezing and thawing your credit comes with no fee. While some fees varied by the state before, the process is now free, no matter your location in the US.
Even if you are already a victim of identity fraud, the process is free. While victims of ID fraud might have had the fees waived in the past, it is now available for everyone without a charge.
Freezing is Not a Protect-All Approach
One of the ideas behind a credit freeze is to prevent credit fraud by someone who might want to open a credit account in your name. However, it doesn’t protect people's identities from getting stolen. While it will not protect your identity from being stolen, it will make the stolen identity somewhat useless in opening an account.
Anyone that steals your credit card number can use it to make purchases. Also, if your SSN gets into the wrong hands, a freeze can't prevent them from creating health insurance claims using your details or even filing a fake tax return.
This makes it essential to take other precautions to protect other aspects of your finances if you are a victim of a stolen identity.
There could be Credit Delays
If access to your credit report is essential, credit freezes might cause delays or other issues. For instance, your application for a loan or credit card might be delayed. However, in applying for a job and renting an apartment or insurance, you will not be impacted by a credit freeze.
Should one or more of your credit reports be frozen, companies will not extend your credit. Also, your request for a credit thaw online or via phone should be completed within an hour. Mail requests, however, might take a couple of days.
The fast turnaround time might not prevent delays if you didn’t thaw your credit before applying for anything requiring a credit check. Also, there could be a delay if you lose your PIN or password and need a credit bureau to help with the recovery.
Avoiding this delay is possible by thinking ahead and thawing the freeze before applying for a loan, insurance policy or lease.
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