A credit freeze is something that you can put in place to limit others from viewing your credit reports, including lenders. Freezing your credit is an extreme step, but it might be necessary if you are dealing with identity theft. Moreover, if other measures, such as fraud alerts, have not been effective for you, you may have to opt for a credit freeze. Since a credit freeze stops most lenders and service providers from obtaining your credit report, you will have to lift the freeze before making any applications for new credit. Keep in mind that freezing your credit report simply as a preventive measure may cause undue inconvenience. So, before you request a credit freeze, here are a few things to keep in mind and pros and cons to look into. Continue reading…
What is a credit freeze?
A credit freeze is a tool used by consumers to help protect themselves against credit fraud. When you freeze your credit reports, most companies are blocked from viewing them until you lift the freeze. When lenders cannot view your credit report, they can’t extend credit. This means that if someone has managed to steal your Social Security number and other personal information, they will not be able to open fraudulent credit accounts in your name. That being said, a credit freeze will also make it impossible for you to get approved for credit unless you lift it temporarily or permanently.
What is the required process for a credit freeze?
You will need to file a credit freeze request with all three major credit bureaus for it to be effective. During the process, you will also need to answer a handful of questions to verify your identity. Moreover, you will need to provide your Social Security number, a copy of a photo ID and proof of residence, such as a recent utility bill. Depending on the bureau, you may get a PIN that can be used to freeze and unfreeze your report in the future. Remember that if you plan to apply for credit with a security freeze on your credit reports, you will need to lift the freezes, either temporarily or permanently, before you apply to ensure the lender can view your reports during its credit check.
What are the pros of a credit freeze?
Here are a number of pros of freezing your credit:
- 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.
What are the cons of a credit freeze?
A few cons of a credit freeze that you need to take into consideration before opting for freezing your credit are as follows:
- 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 are going to opt for a new credit card, consumer finance, car loan, or any other type of loan, then you will 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 a credit freeze will not be helpful in such circumstances.
Credit Freeze facility is Not available in UAE at the moment.