Placing Credit Report Freeze

Placing credit report freeze has many benefits and some disadvantage. This article discusses the process for placing a freeze on your credit reports as well as its benefits and disadvantages.

A credit report freeze is a service which is provided by the credit reporting agencies as required by law. The service has many other names such as credit freeze, security freeze or credit lock and is intended to give consumers the option to prevent the sharing of their credit report information with creditors. Placing credit report freeze is an effective option that consumers have to prevent new or modified credit line fraud which can be lifted with some advanced planning when consumers need to apply for credit.

Credit report freezes are considered more effective when compared to fraud alerts for preventing financial fraud. It is important to note that a credit report freeze will prevent the fraudulent opening of new accounts which is a major portion of all identity theft cases because creditors request a copy of the credit reports for their review before opening new accounts and when their request is rejected by the credit reporting agencies because of the credit report freeze, they do not approve the new account application until the security freeze is lifted and the credit report is shared for their review.

As mentioned, a major advantage of a credit report freeze is the prevention of new credit accounts or modification of existing account limits which require copies of credit reports. Some fraud areas which will be prevented by a credit freeze include new loans, credit cards, mortgage, insurance, government services or payments, rentals, employment, professional licenses, cell phones, and utilities.

On the other hand, major disadvantages of credit freeze include cost and delay in establishing a new credit line unless the credit report holder can demonstrate he or she is a victim of identity theft by providing an official police or DMV report. A credit delay is usually caused because it takes time to lift a credit freeze and therefore the service is the best option for individuals who do not regularly need to apply for new or modified credit account.

Persons who would benefit the most from placing credit report freeze include those who do not often need to apply for new credit such as children.

Placing Credit Report Freeze

A credit report freeze must be placed with each of the credit reporting agencies. As mentioned, it costs money to place or temporarily and permanently lift a credit freeze unless you are a victim of identity theft. Individuals over 65 years old may also qualify for a discount. When you place a security freeze on your file, you will be provided a personal identification number or password to use if you choose to remove the security freeze from your file or authorize the temporary release of your credit report to a specific person or for a limited time.

Please note that all established accounts remain vulnerable to identity theft regardless of the existence of a credit freeze on the credit reports. A comprehensive identity monitoring service is still necessary to detect identity theft.

Read another article about placing credit report freeze.