Sending Your Credit File to the Deep Freeze

   

Given all the talk about identity theft, it's surprising that more people don't take steps to lock their credit file to prevent thieves from wreaking havoc with its contents.

A credit report freeze is the most serious step a person can take to protect their credit identity. Locking up your credit report effectively prevents new lenders from seeing it until you grant them access. No access means that no new accounts can be opened in your name.

Does Credit Freeze Affect Your Credit Score? 

Before considering the pros and cons of a credit report freeze, it's important to note that it does not affect your credit score. A freeze also does not prevent you from obtaining your free annual credit report or purchasing your report or score.

Credit Freeze Pros:

The Control Factor – In its simplest terms, a credit report freeze puts you in control of access to your credit information, and for many people it's all about control.

The Comfort Factor – If you are a victim of new account fraud, putting a lock on your credit information will give you the peace of mind that comes from knowing that not even you can open a new account in your name. No lenders, insurers, or potential employers can do a background check on your file. Other "at risk" people who may benefit from a credit report freeze include those whose personal identifying information has been compromised or lost, and those who don't trust their close relatives or friends who have access to that information.

Your Personal Risk Level – If you fall into the age group at highest risk for identity theft (18 to 24) or the group that spends the most time clearing up identity theft when it occurs (65 and older), freezing your credit information may help you beat the odds.

Prevents New Account Fraud – Crooks who attempt to obtain credit accounts or loans in your name will be stopped dead in their tracks if your credit information has been locked as long as the creditor does due diligence and runs your credit report prior to issuing credit.

Highest Level of Protection – A freeze offers a higher level of protection than a fraud alert, which only requires lenders to take extra precautions when verifying your identity before issuing credit.

Credit Freeze Cons:

Effort – All three credit-reporting bureaus – Equifax, Experian, and TransUnion – must be notified in writing by certified mail of your request to freeze your account. You will also be required to prove your identity to the bureaus.

Cost – Every time you lock or unlock your account, there's a fee (generally $10 to $12). Many states and all three consumer credit reporting agencies allow victims of identity theft to lock up their credit for free, and some states waive the fee for senior citizens. Experts advise that if a loan application is in your foreseeable future, don't lock your account until after the credit check has been completed.

No Guarantee – A credit lock only protects the personal information in your credit file. It cannot prevent someone from stealing your wallet or binge shopping with your credit cards. Identity theft can happen in a variety of ways, so it's up to you to keep all your information away from prying hands and eyes.

The Time Factor –If you choose to unlock your account, it could take up to 10 days for your information to be accessible again, a delay that might decrease your chances for a loan or even a job.

The Thaw Factor – Although credit grantors are denied access to your frozen information, some third parties are allowed in by law. These include federal, state, and local government agencies, law enforcement agencies, trial courts and child support agencies, companies with whom you already do business and collection agencies working for them, companies reviewing your application for employment, companies that want to make pre-approved offers of credit or insurance, and the three credit bureaus.

To freeze or not to freeze? That's a question only you can answer after carefully weighing the pros and cons and how they apply to your individual situation.