What is Credit Freeze? Important Things to Know Before Freezing your Credit
Data breaches have become the biggest problem now these days. From behemoths such as Facebook & target to credit reporting agencies, multiple companies have fallen victim to such kind of hacking that significantly compromised the personal information of millions of people.
Breached information includes people’s credit card, date of birth, phone numbers, social security numbers, email address, and the like. In an event of widespread breaches, it is quite understandable if common people like us want to be extra cautious about sharing their private information with unknown entities and identify thieves.
Thankfully, there are some effective ways to safeguard yourself from identity theft. And one of those ways is Credit Freeze.
Yes, you read it right.
Freezing your credit can help you to tackle this issue but you should know some important things before you opt for this option.
What is Credit Freeze?
Credit freeze is also known as a security freeze. It is something you can put in place to restrict others from viewing your credit reports including lenders just to protect you from identity theft. It entitles you to take complete control of your personal and financial information by preventing the release of your credit score & details reports by credit reporting agencies.
A credit freeze simply means that lenders and creditors will not be able to get the accessibility of your credit report. Thus, it makes it tough for any fraudster and identity theft to open unauthorized accounts under your name. The best thing is that credit freeze is free and it doesn’t take a toll on your credit score.
How to do Credit Freeze?
Freezing your credit is one of the easiest things to do. You can request a credit freeze through email, online, or by phone. The only inconvenient part is that you will have to place a request for a credit freeze with each of 3 credit bureaus one by one and follow their sole processes as they might be different from each other. The process may require you to share all the necessary details that they would require to dig up your information so that they can lock it. Once the credit bureau has applied credit freeze, no one will be able to access your credit profile until and unless you give explicit authorization to the credit bureaus yourself.
What are Pros & Cons of Freezing Your Credit?
Just like any other financial decision, a credit freeze also has its advantages & disadvantages. Here is a quick rundown of the pros and cons of credit freeze that you will need to take into consideration before opting for this option:
- You can freeze your credit at no cost since it is absolutely free.
- A credit freeze inhibits lenders & creditors from getting access to your credit report.
- It is indeed an amazing tool to combat credit fraud and identity theft.
- A credit freeze is one of the best ways to prevent authorized accounts from being opened under your name.
- A credit freeze will last for as long as you want it to be. It would not expire until and unless you remove it with your own choice.
- The process of credit freeze might be time taking since you will need to do it with each credit bureau separately.
- Unfreezing your credit needs a PIN and if in case you forget your PIN, then the thawing process might be lengthy.
- A credit freeze might also take a toll on your other key preferences. If you’re going to opt for a new credit card, consumer finance, car loan, or any other type of loan, then you’ll have to lift the credit freeze. Since this process is lengthy and time-consuming, your application might get delayed as well.
- Freezing your credit can not help in such situations where identity theft or fraudsters have already access to your personal or financial information. For example, if you have been a victim of online banking fraud in the past then credit freeze will not be helpful in such circumstances.
A credit freeze can be an ideal option if you are looking for an effective way to protect your private information such as credit card numbers, date of birth, phone numbers, social security numbers, email address, etc from any fraudulent activity or data breach. Also, it is good for reducing the chances of becoming a victim of identity theft. But please note that it can also be inconvenient to remove a credit freeze from all 3 bureaus each time you require a credit check. So, opt for this option wisely.