You may limit who has access to your credit report by using a security freeze, often known as a credit freeze.
Restricting the disclosure of your credit score and in-depth reports by credit reporting companies, allows you to take control of your financial information.
A credit freeze makes it more difficult for identity thieves to obtain new credit lines in your name since it prevents prospective creditors from seeing your credit record. Your credit score is unaffected by a credit freeze, and it is cost-free.
Equifax, Experian, and TransUnion, the three largest U.S. credit agencies, provide a source of credit data for other businesses.
Your credit history is available for purchase by mortgage lenders, credit card issuers, auto dealerships, and other organizations to determine if you are a good credit risk.
Prior to Credit Freezing
Each credit reporting agency (Experian, TransUnion, and Equifax) allows you to freeze and unfreeze your credit file in a matter of minutes, but this doesn’t imply that you should take this step carelessly.
Recognize the Credit Freeze Procedure
For a credit freeze request to be effective, you must submit it to each of the three main credit agencies. You’ll be asked a few questions along the procedure to help confirm your identity.
A copy of your picture ID, your Social Security number, and documentation of your address, such as a recent utility bill, are also required.
You could register for an account on the bureau’s website so that you can use it to freeze and unfreeze your file at a later time, depending on the agency.
To guarantee that the lender can examine your credit reports during its credit check, you must temporarily or permanently release any freezes on your credit files if you intend to apply for credit while they are still in effect.
You Could Face Credit Delays
In situations when immediate access to your credit information is required, credit freezes might cause delays and other issues.
A credit freeze won’t affect you if you are looking for a job, seeking to rent an apartment, or applying for insurance, but it may occur when you apply for example $200 loan today unemployed and have a credit card.
In most cases, if one or more of your credit reports are frozen, businesses won’t provide your credit. Your Experian credit file may be unfrozen in real time if you make a request via the Experian Freeze Center or your Experian account.
However, the credit bureaus are obligated by law to respond to your request within an hour if you submit it over the phone. However, requests sent by mail might take up to three days to process after being received.
If you neglect to thaw your credit before you apply for anything that needs a credit check, it may result in delays even with a quick response time.
By planning ahead and unfreezing your credit before you apply for a credit card, loan, lease, or an insurance policy, you may prevent these delays.
Why Your Credit Score is Unaffected By a Credit Freeze
Although it may seem as if a freeze would prevent anything from occurring, this is untrue.
You may still make loan and credit card payments as normal while your credit is frozen, and creditors will continue to record your activities to credit agencies.
Due to the fact that your credit score is determined by the information gathered in your credit file, it may and will fluctuate.
Your credit score will be boosted by accumulating favorable information; the two most crucial elements are timely payments and responsible credit use.
The distinction is that your credit information cannot be accessed by creditors who do not already have access to it.
This implies that if you apply for a credit card or loan without unfreezing your credit first, your application will probably be rejected since the prospective creditor can’t examine your credit history to determine risk.
Benefits and Drawbacks of a Credit Freeze
There are benefits and drawbacks to a credit freeze that you should weigh if you’ve been the victim of identity theft or if your Social Security number has been stolen.
Pros of Credit Freeze
Here are a few perks of setting a freeze on your credit files.
It Prohibits Establishing New Credit Lines
No new credit lines or other accounts requiring a credit check may be opened in your name by anybody. A fraudulent applicant will be prevented from opening a credit line.
That’s because lenders frequently analyze your credit history to determine whether you’re a good credit risk and likely to pay back the loan. A credit freeze stops lenders from examining your credit file.
It Assists in Defending You Against Some Sort of Identity Fraud
If you have been a victim of identity theft and have put a freeze on your credit, you may encounter fewer instances of attempted fraud using your personal information.
This is because, although they may still be able to abuse your current accounts if they have access to them, identity thieves won’t be able to obtain new lines of credit in your name.
Has No Impact On Your Credit Score
Your credit score won’t be impacted by freezing your credit. That does not imply that your credit score won’t alter, however.
Other variables such as your level of debt and whether or not you make credit card payments on time can influence your credit score to grow or decrease.
Cons of Credit Freeze
Here are a few drawbacks of freezing your credit reports.
It Demands Dome Work
A credit freeze must be placed or lifted manually. For example, you’ll need to get in touch with the three credit bureaus.
You Have to Remember Your PINs
Your personal identifying numbers to lift and freeze your reports may get lost in the shuffle.
You must enter your PIN in order to remove or freeze your credit reports. You’ll need to go through additional procedures to get a new PIN if you forget or misplace it.
To Provide Creditor Access to Your Credit Information, You Must Remove the Freeze
Lifting the freeze will allow the creditor access to your file when it’s time to start a new line of credit, such as if you apply for a new credit card.
If you suspect identity theft, a credit freeze may help limit your risk, but it won’t completely stop it. It’s crucial to monitor your credit score and do routine credit report checks.
Through AnnualCreditReport.com, you may obtain your free Experian credit report at any time, as well as a free copy of each of your credit reports.
Maintaining a close eye on your credit scores and reports will put you in an excellent position to spot suspected fraud earlier and prevent further harm to your credit history.