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    What Is A Credit Freeze?

    A credit freeze is a useful feature offered by all three of the major credit bureaus.

    It allows you to freeze access to your credit record if you suspect that you’ve been a victim of identity theft or fraud - and there is plenty of that going around nowadays.

    If you ever have the bad luck of being a victim of fraud, a credit freeze may help you to limit the damage to your finances.

    You’ll need to contact the credit bureaus directly to request a freeze.

    Here’s how it works.

    How Does Identity Theft Impact Credit Scores?

    Identity theft and fraud - especially the online variety - are a major cause for concern today.

    The Federal Trade Commission investigated more than 1.4 million fraud reports in 2018 with total losses in excess of $1 billion and many of these situations involved credit fraud.

    • Your credit score could be badly affected if you are the victim of fraud or identity theft.
    • Fraudsters could use your personal information to apply for loans and credit cards in your name. This could put you in default for thousands of dollars.
    • It is certainly possible to cancel fraudulent credit cards opened in your name. Unfortunately, the damage to your credit score may take time to resolve as the card provider investigates and communicates with the credit bureaus.

    A credit freeze can help you avoid the stress and inconvenience of fraudulent borrowing in your name.

    If you ever suspect that you have been the victim of identity theft, a credit freeze should be one of the first actions you take.

    What Is A Credit Freeze And Its Purpose?

    A credit freeze is a request you can make to any credit bureau.

    It involves freezing or locking your credit score and credit history for a certain length of time.

    As mentioned above, one of the ways that identity thieves can cause you serious financial harm is by applying for credit in your name.  

    A credit freeze is a countermeasure that can prevent this type of fraud.

    • Credit providers access your credit record each time you apply for a credit card, loan, auto loan, or other types of borrowing.
    • A credit freeze protects you by keeping your credit profile locked and inaccessible.
      • Any new credit applications made in your name will probably not succeed because your credit history and score will be unavailable to lenders.
    • A credit freeze will not affect your credit score in any way. It should remain exactly where it was prior to the freeze.
    • Requesting a credit freeze from the “big 3” credit bureaus (Experian, Equifax and TransUnion) is free of charge. Smaller credit agencies may charge a small fee for this service.

    How To Freeze Your Credit Score

    The process of freezing your credit score is straightforward.

    Here are the steps you’ll need to follow.

    1. Contact the credit bureau. You can find detailed information on credit freezes and contact details for Equifax, TransUnion, and Experian here.
    2. Verify your identity. You’ll need to provide the bureau with your full name, address, date of birth, Social Security number and possibly a few other relevant details. Once your identity has been verified the bureau will proceed with the credit freeze.
    3. Keep your credit freeze PIN safe. You’ll be issued a PIN by the credit bureau that can be used to freeze and unfreeze your credit score.

    You can request a credit freeze online (the quickest method), by phone or by mail.

    Online requests are processed on the same day while mail requests may take 3 days to complete.

    Please note that Equifax no longer issues or requires a PIN to manage your credit freeze status.

    How To Unfreeze Your Credit Score

    There will be times when you need to lift your credit freeze like when you apply for new credit, a credit limit increase, and when submitting applications for certain jobs.

    Here are the steps to follow:

    1. Contact the credit bureau and request a credit freeze lift. The easiest way to do this is online, but phone and mail requests are also processed.
    2. Enter your PIN if applicable. TransUnion and Experian require you to enter the PIN they issued you when you set up your credit freeze before you can lift it.
    3. Specify how long you want your credit score unfrozen. You can also ask the credit union to lift the credit freeze for a specific lender or employer.
    4. Consider setting up a fraud alert. This will require anyone accessing your credit to verify your identity first.

    If you feel confident that your personal information is now safe, you can cancel your credit freeze by following the same steps above.

    It’s worth noting that a credit freeze only applies to new credit applications.

    Your existing credit providers will still be able to access your credit score and payment history.

    Where You Can Get Help Dealing With Identity Theft

    Being a victim of identity theft can be traumatic - but there are organizations that can help.

    Here are some steps you can follow if you suspect that fraud has taken place in your name.

    • Contact the credit issuer involved. This could be your bank, credit card company, or loan provider.
    • File a fraud alert with the three major credit bureaus.
    • Contact the Federal Trade Commission (FTC) and file an online fraud report. You can also call them at 1-877-438-4338.
    • You can also file a report at your local police department.

    After you have filed your FTC report you can contact your credit providers and ask them to remove fraudulent charges and accounts from your name.

    You will also need to follow up with the credit bureaus to ensure that these amounts are not listed on your credit history.

    As a final step, you may want to be on the lookout for tax fraud carried out in your name.

    You will also need to have your government ID re-issued in case your Social Security number is being used fraudulently.

    Key Takeaways

    A credit freeze is an effective way of protecting yourself from the financial consequences of identity theft.

    The process is simple and free of charge and can be carried out online for faster results.

    It’s essential to stop fraud and identity theft in its tracks.

    If you or someone you know suspects that they have been the victim of this type of crime, a credit freeze is one of the first steps you should take.