The pros and cons of freezing your credit report

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The pros and cons of freezing your credit report
4 years ago
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We have all heard the scary stories about identity theft, and many of us are wondering what we can do to protect ourselves from this growing threat. One tactic that can be used is freezing a consumer's credit report, and in fact many of the most successful credit monitoring services use a credit report freeze as the centerpiece of their service.

Like any other identity theft fighting tool, however, a credit freeze has both its good points and its bad. It is important for consumers to understand both the pros and cons of this credit protection tool.

Let's start with a look at the good parts of placing a freeze on your credit report.


The Pros of Freezing Your Credit Report
- Placing a freeze on your credit report will not negatively impact your credit score.

- Freezing your credit report can greatly reduce the chances of identity theft and unauthorized use of your credit information.

- You can still open new credit accounts after the freeze has been put in place, but it will be necessary to lift the freeze temporarily.

- Placing a freeze is easy and relatively quick. Freezes must be in place within five (5) business days of the receipt of a written request.

- Lifting a credit freeze is also relatively fast. Credit reporting agencies are required to lift the freeze within three (3) business days of receiving the request.

- You can still order a copy of your own credit report after the freeze has been placed. Even though the credit freeze is in place it is still a good idea to check your own credit report at least once a year.


The Downside of Freezing Your Credit Report
Nothing is perfect, and credit freezes are no exception. While freezing your credit report can greatly reduce your risk of becoming a victim of identity theft, there are some important drawbacks as well. The credit freezing and unfreezing process can be cumbersome, especially if you plan to apply for a mortgage, car loan or other financial instrument. Some of the potential drawbacks of instituting a credit freeze include:

- It may not be advisable to institute a credit freeze if you will be applying for a mortgage or other loan in the near future. That is because it will be impossible for that creditor to see your credit score while the freeze is in place.

- The process of freezing and unfreezing your credit report repeatedly can be cumbersome and time consuming. It may be best to wait until you have applied and been approved for the credit you need before putting a credit freeze in place.

- A credit freeze does not prevent all access to your credit file. Collection agencies and current creditors will still have access to your credit information, and placing a credit freeze will not hamper collection efforts for overdue accounts.

- Freezing your credit will not stop all pre-approved credit offers. It is possible to opt out of receiving these offers, but simply placing a freeze on your credit report will not stop those unsolicited offers.

- Governmental agencies, including taxing authorities and child support collection services, will still have access to your file, even after a freeze has been put in place.

- Job seekers should know that a credit freeze will prevent a potential employer from conducting a background check. In order for such a check to be conducted you will need to temporarily lift the freeze.


Some Practical Advice
So you've weighed the pros and cons and you want to go ahead with a freeze request. Just how do you make that magic happen? It is actually easier than you think, and most consumers should be able to institute a freeze on their credit reports without outside assistance.

When requesting a credit freeze, it is important to make the request in writing. A written record is essential for a successful freeze. It is also important to request the freeze with all three credit reporting agencies ??Equifax, Experian and TransUnion. Requesting a freeze with one credit reporting will not freeze the report at the other two. In addition, freezing your own credit report will not automatically freeze the report for your spouse. It is important for each spouse to freeze his or her own credit report individually.

If you are concerned about unsolicited credit card offers and similar mailings, it is important to take one additional step. Freezing your credit report will not automatically stop these mailings. In order to reduce the number of pre-approved credit card offers you must contact the Federal Trade Commission (FTC) and request that they be stopped. The FTC has set up a special hotline for consumers at 1-888-5-OPT-OUT. Consumers can also opt out of these offers by visiting www.optoutprescreen.com. While this will not stop all offers, it can greatly cut down on the number of offers received.

As with all other credit protection tactics, placing a freeze on your credit report is not a panacea. It can be a good step, however, and consumers who are concerned about the protection of their personal information may want to consider taking this important step.
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