Credit Freeze

What Is A Credit Freeze?

A Credit Freeze (sometimes called a Security Freeze) is one of the best identity theft prevention tools.  It gives consumers the choice to “freeze” or lock the access to their credit file against anyone who tries to open a new account or tries to get new credit in their name.

Many states (not all) have laws that allow this.  Credit freeze laws vary from state to state. In some states, anyone can freeze their credit file, while in other states, only identity theft victims can do so.  When you place a credit freeze on yourself, potential creditors and third parties will not be allowed to access your credit report unless you lift the freeze temporarily.

When you place a Credit Freeze, it is very unlikely that an identity thief would be able to open any new accounts using your name. 

With a credit freeze in place at all three of the major credit reporting agencies, a consumer's credit report and credit score cannot be accessed by potential creditors or other persons considering opening new accounts unless the consumer decides to remove the freeze. 

Most businesses will not issue new credit to an individual without first checking their credit report or credit score.  If an individual consumer reporting file is frozen and a crook applies for credit in that individual's name, a creditor would most likely deny the imposter's application, thus preventing another instance of identity theft.

When a consumer places the freeze, the consumer reporting agency issues a unique PIN to the consumer that can be used to lift the freeze for a particular company or for a specific period of time.

Some states will not charge you for making a credit freeze if you are an identity theft victim, but will charge you if you are not a victim. Usually the fee is about $10, which is the cost for each of the three major credit reporting agencies. To implement the freeze, you would have to contact each of the credit agencies.

What Will A Credit Freeze Do?

Placing a freeze:

1. Will not affect your credit score
2. Will not keep you from getting free annual credit reports
3. Will not keep you from buying your credit score.

A credit freeze tells the consumer reporting agencies not to allow access to your credit score or your consumer reporting file  unless you have authorized that access or the company seeking to see your file has an exemption from the credit freeze law, (as do your current creditors).

A credit freeze prevents crooks from using your credit record to open a new account because most businesses will not open new accounts without first checking the credit history.  If your consumer reporting file is frozen, even someone who knows your date of birth, name and Social Security Number should be stopped from opening a new account in your name.

With a credit freeze, you will still have access to your free annual credit reports. You will also be able to buy your reports and credit score.  Also companies with which you do business, will still be able to access your credit report.  Such as the phone company, credit card and mortgage companies.  Also collection agencies that are working for those companies, will have access.

Also, in some states, insurance companies, potential employers, landlords, and other non-creditors will still be able to access your credit report even with a credit freeze in place.

In most states, once you place a credit freeze and then want it lifted, the credit reporting agencies have three days in which to remove the credit freeze.  Thus, if you need to get some form of credit in a hurry, you need to consider that there could be a three day wait. 

If you need to give someone access to your credit report and they are not covered by the exceptions to the credit freeze law, then you would need to temporarily lift the freeze.  Also you would need to lift the freeze if you wanted to apply for a credit card or a loan.

To lift a credit freeze, you would use a PIN that each credit reporting agency gives you when you place a credit freeze.  Most states will charge you a fee in order to lift the credit freeze.

What Will A Credit Freeze Not Do?

A credit freeze is not not a solution to all forms of identity theft.  It will help prevent an identity thief from opening a new account in your name, but it will not stop an identity thief from using your existing credit cards or financial accounts. 

Basically, any transaction that can take place without the need for a credit report or a credit check, can still happen.  Things like setting up a new bank account, a telephone account, or a credit account could still be done, as long as a credit check or credit report is not made.

If an identity theft has already occurred when you place a credit freeze, the freeze won't stop the thief from using an account he already has access to, but it will prevent new accounts from being opened when a credit report or credit check is made. 

What’s The Difference Between A Fraud Alert And A Credit Freeze?

A fraud alert is another tool that can be used by someone who has had their identity stolen (or suspects it might have been stolen).  They are the only ones who can take this action.  Whereas in some states, anyone can place a credit freeze.

When a fraud alert is put into effect, a business can still check your credit report, but under the federal Fair Credit Reporting Act, before a potential creditor can issue credit in your name, they must contact your or follow "reasonable policies and procedures" to verify your identity. 

You need to be aware that the steps that potential creditors take to verify your identity will not always alert them to an identity thief who is filing a false application.

Whereas, a credit freeze is a means to prevent identity theft on new accounts.  A credit freeze allows the consumer to limit access to their consumer reporting file.

A credit freeze will stop potential new creditors and third parties from even accessing your credit report. (Unless you lift the freeze).  Some consumers feel credit freezes give them more protection.

Fraud alerts are mainly effective against new credit accounts being opened in your name.  But they generally will not stop thieves from using your existing accounts or opening a new account where credit is not checked.

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