04 Jun Everything you need to know about Credit Freezes
Often called security freezes, credit freezes are tools that allow you to restrict access to your credit report, which in turn can make it more difficult for an identity thief to open any new accounts in your name. This is because most creditors need to see your credit report prior to approving new accounts. If they can’t see the file, they may not extend the credit.
WHAT A CREDIT FREEZE WON’T DO…
When it comes to a credit freeze, they do not impact your credit score. In addition to not affecting your credit score, they also won’t do any of the following:
- prevent you from getting a free annual credit report
- prevent thieves from making charges to your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.
- keep you from opening new accounts, applying for jobs, renting an apartment or buying insurance. But if you’re doing any of these, you’ll need to lift the freeze temporarily, either for a specific time or for a specific party, like a potential landlord or employer. The cost and lead times to lift a freeze may vary, so it is best to check with the credit reporting company in advance.
If you want to stop receiving prescreened offers of credit, a credit freeze won’t stop this. Instead, call (888) 567-8688 or go online. Nationwide credit reporting companies operate this number and website. You can opt-out for five years or permanently. However, some companies send offers that are not based on prescreening and your federal opt-out right will not stop those kinds of solicitations.
If you consider opting out, know that prescreened offers can provide many benefits, especially if you’re in the market for a credit card or insurance. Prescreened offers can help share what’s available, compare costs and find the best product for your needs. Because you’re pre-selected to receive the offer, you can be turned down only under limited circumstances. The terms of prescreened offers also may be more favorable than those that are available to the general public. In fact, some credit card or insurance products may be available only through prescreened offers.
WHO CAN SEE A FROZEN CREDIT REPORT?
Certain entities still have access to viewing a credit report if it has been frozen. Your report can be released to existing creditors or to debt collectors acting on their behalf. It can also be viewed by government agencies that may have access in response to a court or administrative order, subpoena or search warrant.
HOW TO FREEZE A CREDIT REPORT?
Need to place a freeze on your credit report? Contact each of the nationwide credit reporting companies:
To freeze a credit report, you will need to supply your name, address, date of birth, social security number and other personal information. Fees may vary based on where you live but often range from $5 to $10.
After a credit freeze has been requested, each credit reporting company will send a confirmation letter to you that contains a unique PIN (personal identification number) or password. Keep the PIN or password in a safe place as you will need this in order to lift the credit freeze.
HOW TO LIFT A CREDIT FREEZE?
In a few states, a credit freeze can expire after seven years. For most states, credit freezes remain in place until you ask the credit reporting company to temporarily life it or remove it altogether. A credit reporting company must lift a freeze no later than three business days after receiving a request. The cost to lift a freeze varies by state.
If you request a temporary lift because you may be applying for credit or a job, and you can find out which credit reporting company the business will contact for your file, you can save some money by lifting the freeze only at that particular company.
CREDIT FREEZE VS. FRAUD ALERT
What’s the difference between a credit freeze and a fraud alert? Credit freezes lock down a person’s credit, whereas a fraud alert allows creditors to get a copy of a person’s credit report as long as they take steps to verify that person’s identity. For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request. Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions.
Three types of available fraud alerts:
- Initial Fraud Alert. If concerned about identity theft and haven’t become a victim yet, this fraud alert will protect your credit from unverified access for at least 90 days. You may want to place a fraud alert on your file if your wallet, social security card or other personal, financial or account information is lost or stolen.
- Extended Fraud Alert. For victims of identity theft, an extended fraud alert will protect their credit for seven years.
- Active Duty Military Alert. For those in the military who want to protect their credit while deployed, this fraud alert will last for one year.
To place a fraud alert on your credit reports, contact one of the nationwide credit reporting companies. Fraud alerts are free. The company you call must tell the other credit reporting companies; they, in turn, will place an alert on their versions of your report.