Identity theft can be a shocking and depressing experience that has far reaching consequences, and it can be quite difficult to overcome. Unfortunately, identity theft cases continue to increase. If you have been a victim of such a fraud and want to increase the security of your credit score history, then you can place a security lock on your record with protection measure called Credit Freeze.
Credit freeze locks your repayment history, which is maintained at the consumer reporting agency. It makes it impossible to release the data without your permission to an unknown party. They are also termed as security freeze, credit lock, or credit report freeze.
Credit freeze protects the account from being misused, and thus protects you from identify thefts. Since, this kind of fraud has been an ongoing problem, credit freeze system has been initiated by state laws, and it is implemented in most of the countries across the world.
What does the credit freeze do?
It secures the account from being used by others for loans or opening an account under your name by locking the credit. This security program does not allow anyone to access your credit data including you, unless a written notification is submitted to credit bureaus with your personal identification number.
Credit freeze does not allow the agencies, lenders, insurers or others to access your data. This sometimes might create a problem when you apply for a loan and the creditors want to access your account details. Therefore, plan your monetary requirements properly because instant credit would not be possible during the credit freeze on your repayment history.
This freeze on your credit reporting blocks the new applications, restricting instant access to fund you might need. However, all your existing creditors will be able to view your details, whenever they want.
Freezing your credit rating score isn’t fully guaranteed against identification fraud. If your creditors or lenders bypass the credit assessment, an identification thief can still open records in your name. Besides, you should also know that not all types of identification fraud involve opening up of new accounts with your identification.
Credit Freeze Charges
The cost of freezing the account varies depending up the credit bureaus. Generally, the fee would be $10 every time you freeze your personal information and the same charges are applicable for releasing the lock. All the major three credit bureaus have made a beneficial option available for the consumers who are the victims of identity theft to waive the fees.
The consumer union has requested the credit bureaus to reduce the fees to $5 for unfreezing or temporarily suspending the credit.
Who can access the consumer files during credit freeze?
The creditors also cannot view or access the data while there is a credit lock, they will be able to see a message or a code specifying that files or data are locked. This can be viewed only by your existing creditors and certain agencies dealing with law enforcement like criminal background check or credit card companies or any other financial institutions.
Requirements of credit freeze and unfreeze
The letter of notice to freeze your account having repayment history needs to be addressed to each credit bureau including your photo ID card, social security number and address proof. The credit bureaus, after reviewing the submitted documents upon approval, will send you a personal identification number through mail.
Notification to credit bureaus by submitting the personal identification number is required to unfreeze you credit lock. Temporary release of consumer report can be authorised on the name of the person who should receive it. Different credit bureaus will have different methods of freezing the credit reports. Some of the credit bureaus accept your request in paper and some online.
Consumers who require an insurance policy, loans or a job will have to unfreeze the access to their credit ratings can temporarily suspend the facility by placing a request to credit bureaus by mail or phone calls.
Reasons why you should go for credit freeze
Freezing the credit is considered to be both advantageous and disadvantages for its own reasons. Freezing the access to our details completely depends on you, as you might have been a victim of following
New account fraud
Personal identification number being misplaced
Credit card being stolen.
Wallet or purse being misplaced.
The good thing of this protection service is that it can be thawed by submitting a request, however if it is repeated a lot of times, you might end up paying money more than required on it.
Credit reporting agencies are regulated through the FCRA act - Fair Credit Reporting Act. The Major credit bureaus or credit reporting agencies are –
Main Difference between Credit Freeze and Fraud alert
Customer supporter state that fraud alerts do little to secure customers. This is because it is free of cost and many customers put fraud alert signals on their information even if they haven't been a victim before. The credit issuer receives special message while checking the credit rating as a fraud alert indicating any scam taking place on the account. Identity theft can be prevented by opting for fraud alert.
Credit Freeze is locking your credit report and making it unavailable for potential creditors to access it unless you approve of it and complete the formalities to unfreeze the report. Credit accounts cannot be opened by the businesses without validating the repayment record.
A credit score freeze is an easy way to secure your credit score profile against identity thieves. It is either free, or fairly reasonable, and highly effective against allowing new lines of credit score from being opened. The only downside is that it can be a little troublesome to unfreeze your credit score account if you need immediate access to it. However, this is a small price to pay for the added security and peace of mind, which you’ll get in the near future.