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What’s a Credit Freeze?

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Looking for ways to shield your credit from fraud? A credit, or security, freeze is an option you may want to consider, but there are some caveats.

Credit freezes enable you to prohibit third parties from accessing your credit profile. This can help prevent new credit – including loans, mortgages, credit cards, auto loans and the like – from being established in your name while the freeze is in place. However, you will still be able to obtain copies of your credit report and existing creditors are also still allowed to access your credit reports.

There is a small fee, ranging for $3 to $12 depending on your state of residence, to place the freeze on your credit report. And in most cases, the fee is waived for identity theft victims who can produce a police report as evidence.

Until you request that it be lifted, the credit freeze will remain on your profile as there is no expiration date. In most instances, consumers do not remove the freeze unless they wish to apply for some form of financing or employment that will require a credit check. And when the freeze is lifted, you can conduct business as usual, and place it back on your profile once you have accomplished your objectives.

Exceptions to the Rule

Not all organizations are banned from accessing your credit report if a freeze is in place. These include:

  • Entities that sell credit profiles and scores to consumers
  • Collection agencies that have one or more of your accounts in their possession
  • State and local agencies, such as the court system, child support and law enforcement
  • Organizations permitted to access this information under the Fair Credit Reporting Act

To place a security freeze on your credit report, start by contacting your state Attorney General’s office to inquire about the fees for this service.

Next, you will need to contact each of the three major credit bureaus to submit your request. You can find instructions on how to do this on the bureaus’ websites.

Is a Credit Freeze Right for You?

If you plan to apply for credit in the near future, you may want to hold off on placing a security freeze since it can take up to three business days for the lift to be processed, which will delay the application process.

It is important to note that placing a credit freeze will not stop fraud on existing accounts and accounts that don’t require credit checks (some utilities, for example); it only serves as a deterrent, or added layer of protection against future occurrences of new credit account fraud.

A fraud alert is one alternative to a credit freeze.  While it doesn’t prevent third parties from accessing your credit reports, it does notify creditors to take extra precautions in verifying your identity when reviewing applications for credit in your name.

If someone has stolen the information for any of your existing credit accounts, check your statements for unauthorized charges and alert the issuing bank immediately. If you’re concerned that someone has obtained credit in your name, you can find out by checking your credit reports (which you can get for free once a year).  If you monitor your credit scores regularly (you can do this using a free tool like the Credit Report Card) and notice an unexpected drop in your scores, that might be a sign of an unauthorized account that’s gone unpaid. This is a clear sign to check your credit reports for issues so you can resolve them before they do any further damage to your credit.

More on Credit Reports and Credit Scores:

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