The Cons Of Freezing Your Credit
- A credit freeze isnt guaranteed to be 100% effective
- You need to contact each credit reporting agency individually to issue a credit freeze and then subsequently to lift the freeze
- Youll need to plan ahead when opening a new credit account since youll need to request a temporary lift of the credit freeze
As you can see from the list of pros and cons, there are tremendous benefits to freezing your credit, while the downside mostly deals with convenience. I think its a small price to pay for the security that it offers.
If youve ever had to dispute anything on your credit report or deal with a fraudulent account, then youll know that the amount of time it takes to instate a credit freeze is time well spent. The time involved in getting a credit freeze from the major credit bureaus pales in comparison to the hassle of disputing an error on your credit report.
If you are ready to freeze your credit, heres what you need to know.
Sample Letter For Disputing Billing Errors
Send the letter Certified with a Return Receipt Requested
Attention: Disputes and Billing Inquiries
Dear Sir or Madam:
I am writing to dispute a billing error in the amount of on my account. The amount is inaccurate because . I am requesting that the error be corrected, that any finance and other charges related to the disputed amount be credited as well, and that I receive an accurate statement.
Enclosed are copies of supporting my position. Please investigate this matter and correct the billing error as soon as possible.
Sincerely,
What Is A Credit Report And What Does It Include
Reading time: 3 minutes
Highlights:
- A credit report is a summary of how you have handled your credit accounts
- It’s important to check your credit reports regularly to ensure the information is accurate and complete
A credit report is a summary of how you have handled credit accounts, including the types of accounts and your payment history, as well as certain other information thats reported to credit bureaus by your lenders and creditors.;
Potential creditors and lenders use credit reports as part of their decision-making process to decide whether to extend you credit and at what terms. Others, such as potential employers or landlords, may also access your credit reports to help them decide whether to offer you a job or a lease. Your credit reports may also be reviewed for insurance purposes or if youre applying for services such as phone, utilities or a mobile phone contract.;
For these reasons, it’s important to check your credit reports regularly to ensure the information in them is accurate and complete.
The three;;that provide credit reports nationwide are;Equifax, Experian and TransUnion. Your credit reports from each may not be identical, as some lenders and creditors may not report to all three. Some may report to only two, one or none at all.;
Your Equifax credit report contains the following types of information:
- Identifying information
- Inquiry information;
There are two types of inquiries: soft and hard.
- Bankruptcies
- Collections accounts
Recommended Reading: How To Help Credit Score
How To Unfreeze Your Credit
Once you decide to unfreeze your credit, you have to contact the major credit bureaus again. When applicable, use your unique PIN to unfreeze your credit.
Keep in mind that you must do so in a given time frame. If you make a request to unfreeze your credit through a phone call, it will take place within an hour. Meanwhile, if you request this through the mail, the unfreezing will take place within three business days.
Unfreezing Your Credit Report
When you’re ready to unfreeze your credit report, you have a few options. You can do it online, by phone, or by mail. Unfreezing your credit report online or over the phone are the faster options.
Make sure you have the PIN or password that was provided to you when you first placed the freeze on your credit report. Unfortunately, if you lose your PIN, you may have to request a replacement PIN by mail, sending along proof of your identification. This would slow down your application process. Otherwise, unfreezing your credit report is relatively simple.
Don’t Miss: How To Get Rid Of Inquiries On Your Credit Report
Could It Hurt My Credit Scores
Unfortunately, being a victim of identity theft means your may be negatively impacted. Thieves could;open new lines of credit or credit cards in your;name;– and fail to pay;the bills. As debt accumulates and payments are missed, your scores may be negatively affected, because of the payment history associated with the accounts or the increase in your credit utilization. Learn more about what actions can affect credit scores.
After you report the fraud, you can work with collection agencies and banks to get any fraudulent collection accounts, late payments and balances removed from your credit reports. You can also file a dispute with the three nationwide credit bureaus. Visit our dispute page to learn how to file a dispute with Equifax.;
How A Credit Freeze Works
A credit freeze allows a consumer to control and restrict access to their . This makes it more difficult for thieves, scammers, and other unauthorized parties to open credit in that consumer’s name without their permission. Under federal law, the top three credit bureaus are required to comply with a consumer’s credit freeze requests at no charge. The practice has become one of the main tools used by victims of identity theft to protect themselves.
The importance of credit freezes in disrupting identity theft stems from the fact that thieves often seek to open new credit accounts using stolen information. For instance, they might apply for new and lines of credit, to then make large purchases and leave the victim to deal with the unpaid debts. In most cases, lenders will ask to see the borrower’s credit report as part of the process for opening new accounts. Therefore, by freezing their credit, victims of identity theft can block thieves from opening new accounts in their name, potentially sparing themselves from significant financial harm.
Don’t Miss: What Is A Good Credit Score Number
How To Suppress Credit Information
There is a clear process that you and the credit bureaus must follow in regard to the suppression of credit information. You have to send all of the following documents to each bureau whose report contains the fraudulent info:
- Proof of your identity
- Identity Theft Report
- Description of the fraudulent info
- Statement attesting to the fraudulence of the info
The credit bureau can then accept your complaint or request more information. If a bureau accepts, it is required to suppress suspected fraudulent information within four business days. It must also notify the so-called data furnisher . Data furnishers cannot sell or send to collections any debt while it is suppressed. That would not be the case if you submitted your complaint directly to the furnisher, however, which is one reason why doing so isnt a necessity.If a credit bureau needs more information, it can request it within 15 days of receiving your complaint. A bureau can also make a second request within 15 days of the first. It is required to make a decision within 15 days of the first request or five days after receiving the additional info.Finally, with all of the info in hand, the credit bureau can decline or rescind the suppression if you:
What Does Freezing My Credit Do
When you freeze your credit, the credit reporting bureaus canât give any information to anyone who makes an inquiry about you. Typically, businesses inquire about your credit when you are trying to, for instance, open a new credit card, buy a car or rent an apartment. The credit check helps the business determine if they want to lend or rent to you, and it can help set your rates and lending terms for loans and credit cards.
When your credit is frozen and the business canât get any information about you, it typically stops the process â which means a fraudster will be unable to open an account while using your identity.
Also Check: Is 779 A Good Credit Score
How Do I Place A Security Freeze
To place a freeze, you must contact each of the three credit bureaus. You can request the freeze by mail. See the sample letters at the end of this sheet for addresses and what information to include.
You may also place the freeze online. Here are the freeze web pages for the credit bureaus. Note: If these links do not work, search “security freeze” on the credit bureau web sites.
Starting September 21, 2018, you can freeze and unfreeze your credit file for free. You also can get a free freeze for your children who are under 16. And if you are someones guardian, conservator or have a valid power of attorney, you can get a free freeze for that person, too.
How Do You Freeze Your Credit
To freeze your credit, youâll need to contact each of the three major credit bureaus: Equifax®, Experian® and TransUnion®.;
Each bureau has its own process, but be prepared to share some personal information, such as your Social Security number and birthdate. Youâll also have to verify yourself. That might mean providing copies of personal documents, such as a driverâs license and a bank statement.
Each bureau lets you freeze your credit online. Itâs a great option because you can also quickly unfreeze your account that way. But they also have telephone and mail options, which you might need if youâre freezing the credit of someone else.;
You can visit each bureauâs website for the latest information. But here are some basics about each bureau to get you started:
How to Freeze Your Credit With Equifax
Hereâs how Equifax says you can freeze your credit:
Hereâs how Experian says you can freeze your credit:
Hereâs how TransUnion says you can freeze your credit:;
- Online:Create a free account with TransUnion. Youâll be able to use the account to manage your freeze and access other services.
- Phone: Call 888-909-8872 to place a freeze over the phone. When you call, youâll have to choose a six-digit PIN.
- Mail:TransUnion says to include your name, address and SSN in your letter. It also notes youâll need to choose a six-digit PIN. Mail written requests to:
- TransUnion Woodlyn, PA 19094
Important Things to Remember About Credit Freezes
Recommended Reading: Does Capital One Report Credit Limit
A Credit Freeze Is Helpful But Not A Cure
A credit freeze can help reduce your exposure if you suspect identity theft, but it won’t eliminate it entirely.
It’s important to keep track of your credit score and check your credit reports regularly. You can get a copy of each of your credit reports every 12 months through AnnualCreditReport.com, and you can access your free Experian credit report anytime. Now through April 2021, you can receive a free credit report from each of the bureaus once a week from AnnualCreditReport.com.
As you stay on top of your credit scores and reports, you’ll be in a good position to detect potential fraud sooner, minimizing any damage to your credit history.
Why Doesnt Everyone Just Freeze Their Credit Then
While freezing your credit wonât guarantee safety, itâs a pretty strong defense against identity theft. But remember â you still need to unfreeze your credit if you legitimately want to apply for a loan or line of credit. While itâs not a heavy burden, it does add extra steps anytime you do something that requires a credit check.
You could opt for credit monitoring instead of a full freeze. When you pay for a credit-monitoring service, youâll get alerts about any activity involving your credit report. This can quickly bring a potential problem to your attention â but itâs not preventative, so you wonât know if someone has used your identity until after it happens.
You can also request a free copy of your credit report annually from each of the major credit bureaus and check it for any activity you donât recognize. If you find anything suspicious, report it immediately and take steps to lock down your credit through a fraud alert or credit freeze.
Read Also: Which Credit Score Matters The Most
Why Might You Freeze Your Credit
If youve been a victim of a data breach like me, freezing your credit could help thwart the efforts of identity thieves.
Data breaches are incidents in which your confidential information stored with a third party, such as a merchant, health care organization or bank, becomes available to outside entities without your permission.
Criminals may hack into a retailers database and steal personal information such as your name, address, birthday, email address, credit card numbers and Social Security number.
Using this information, someone may make a purchase, open a utility account, apply for credit cards or access medical services under your name. Creditors may then approach you for payment of goods and services consumed by the identity thief.
For example, a criminal may be able to open a store credit card in your name using your Social Security number and home address, and then purchase items with this card. Later, you the victim may receive the bill for items purchased by the thief.
David Blumberg, public relations director at credit reporting agency;TransUnion, a Credit Karma partner, says, A freeze is a drastic solution, but it can prevent a credit report from being released in response to a new credit application.
How Credit Locks Work
When you lock your credit file with a specific credit bureau, lenders can no longer access your credit file from that bureau.
While the timing for each bureaus product varies, credit locks allow you to quickly lock and unlock your reports in a relatively painless manner . Locks may be removed instantly or take up to 48 hours to be removed.
Also Check: When Do Credit Cards Report Late Payments
How To Unfreeze Credit
Unfreezing credit, sometimes called thawing, can be done on a temporary or permanent basis.;
Itâs free to unfreeze your credit, but the process is different at each bureau. Hereâs what they say:
- Equifax: You can manage and unfreeze your account in multiple ways. But it might make sense to use the same method you used to place the freeze. You can , call 888-298-0045 or use the same form to submit a request through the mail.
- Experian: Make sure you have the PIN you were given when you placed your freeze. Itâs crucial whether youâre removing a freeze online or over the phone . If you donât remember your PIN, youâll have to go through the verification process again. You can also submit through the mail, but youâll need to provide the same information and documents used to freeze your credit.
- TransUnion: The bureau says that the simplest way to remove a freeze is to do it online. You may also be able to do it over the phone or through the mail. You can call TransUnion at 888-909-8872 to find out more.;
Existing Creditors Can Still Access Your Credit History
Even under a credit freeze, an existing creditor can access to your credit report for certain types of account review, collection purposes, fraud control, or related activities. For example, the following entities may still access your credit report during a freeze:
- a collection agency acting on behalf of an existing creditor, and
- state or local agencies, such as law enforcement and child support agencies.
Don’t Miss: How To Gain Credit Score
Freezing Your Credit Can Make It Harder For Scammers Trying To Open New Lines Of Credit Under Your Name
If you have concerns about account security and identity theft, freezing your credit can make your data more secure by restricting access to your credit report.;
Itâs free, but there are a few steps you have to takeâand multiple companies to talk to. Hereâs how to freeze your credit, plus other information about credit monitoring and protecting against fraud.
Whats The Difference Between A Credit Freeze And A Credit Lock
A credit freeze and a credit lock both make it harder for criminals to access your credit, but there are key differences between the two. Freezing your credit is free and may offer stronger legal protections, but doing so may involve setting up an account and obtaining a PIN from each bureau. Its simpler to lock and unlock your credit and you can do so instantly, but you may have to pay a fee.
Recovering from identity theft can be challenging. There are reports to create, disputes to file, and institutions to notify. The good news is there are steps you can take to reduce your chances of becoming a victim.;
One of the most effective ways is to utilize a credit freeze or a credit lock. While each option makes it harder for criminals to access your credit, there are some differences between the two.
Recommended Reading: Does Opensky Report To Credit Bureaus
What Happens After Suppression
Disclaimer: Editorial and user-generated content is not provided or commissioned by financial institutions. Opinions expressed here are the authors alone and have not been approved or otherwise endorsed by any financial institution, including those that are WalletHub advertising partners. Our content is intended for informational purposes only, and we encourage everyone to respect our content guidelines. Please keep in mind that it is not a financial institutions responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offers details page using the designation “Sponsored”, where applicable. Advertising may impact how and where products appear on this site . At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.