September 21st, 2018 has become a day when borrowers could finally breeze freely. This was the day when it’s been made possible for ordinary borrowers to either freeze or unfreeze their credit reports free of charge. The nationwide law has established this procedure to make sure a credit will not be approved for a frozen credit report.
How Does It Work?
Lendees who are used to taking loans online, know that you can’t qualify for loans immediately if you don’t provide your information to the lender. That’s why security breach issues have been occurring and threw a shadow on those easy and fast loans online. With a free credit freeze, only you can get an access to your credit report. You can then lift the freeze with your PIN.
A credit freeze makes you a sole manager and supervisor of your credit report. You will have to manually lift the freeze when interacting with credit card providers, insurance companies, cell phone companies, and, in some cases, a prospective employer.
Freezing and Unfreezing the Credit
Anyone can request a credit freeze by contacting their credit report agency either by phone or mail. Upon freezing your credit you receive a custom PIN, which you will need to thaw the credit in the future. The process of either freezing or thawing the credit takes about an hour. A borrower needs to be careful with the PIN. In case he loses it, a new one can be received via U.S. mail only.
What Does Credit Freeze Protect From?
The freeze doesn’t affect your credit score. It has no effect on your happening financial relationships, such as credit card accounts, mortgage, and other loans.
What it does is protect the client from financial identity fraud. It makes it much harder for criminals to access your credit card information and use it. With more than 145 million Equifax users had their personal data security compromised last year, the introduction of credit freeze has become vital to execute money transactions safely.
Compared to Credit Locks
Credit Lock is a feature known to credit users for a long time now. It is only free if offered by Equifax. It is offered by Experian with a certain fee and an agreement to receive bargain and deals alerts from TransUnion. Credit Locks, however, are placed and lifted much faster – in a matter of seconds.
As a matter of the client’s safety, credit freezes win. Their placement is regulated by the federal law, which the borrower is protected by, in case security issues arise.
In Practice
After the Equifax security breach has taken place last year, only 14% of credit users (according to the AARP survey) had their credit reports frozen. The main reason for such security negligence was a simple lack of finance. Many people claimed that credit freeze was too costly back then ($10 monthly) or they thought that their poor credit and not so wealthy financial standing presented any interest to credit card fraudsters.
With the introduction of the credit freeze, the government hopes for more people to become responsible for their credit safety. That’s why TransUnion even launched a smartphone app, myTransUnion, for a more convenient freeze and thawing of credit.
When One Should Freeze Credit?
If you have been, or currently are, a victim of identity theft, place the freeze on credit. These are other signs when you should take immediate action to protect your credit:
- You’ve received bills, collection notices on your name and address but you cannot recall such money transactions.
- You can spot credit report inquiries that you didn’t know of.
- Your bank notifies you of the data breach on your account, or the bank itself.
Protecting your Children
You children can also become victims of identity theft. Despite the fact that they have no credit files, fraudsters can be after their clean credit history. The new law makes it easier to protect your kids as well.
Bottom Line
The credit freeze doesn’t guarantee the bulletproof safety of your account. It simply makes it impossible for new accounts to be created on your name. You, on the other hand, should carefully monitor your credit state and protect your existing account with either a freeze, a lock, or at least a fraud alert.
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