What you should know about a credit freeze.

 

Freezing your credit report can at times be a very necessary tool. It prevents credit thieves from opening new cards and other accounts in your name, and is often recommended when you’re dealing with data breaches and/or identity theft.

What is a credit freeze?

A credit freeze, aka security freeze allows you to “lock” your data at major credit bureaus. Doing this makes it more difficult for identity thieves to open new accounts in your name. The theory being if creditors can’t see your file, they most likely will not extend the credit.

Keep in mind that a credit freeze will not stop an identity thief from using your existing accounts, so you should always be monitoring credit card, bank, and insurance statements for fraudulent charges.

Does a credit freeze affect my credit score?

Credit freezes do not affect your credit score or prevent you from receiving your annual credit report.

What could affect your credit score is being a victim of identity theft. I have seen clients lose over 100 points after falling victim to ID theft. Typically the damage is only short term, because once the fraudulent credit information is removed from your credit reports, your score will jump back. However, this could take weeks and even months.

Should you freeze your credit file?

If an account has been opened in your name or if your Social Security number was taken in a data breach – you most definitely need to freeze your credit report.

With 2015 being dubbed “the year of security breaches” (think Premera, Ashley Madison & OPM) you can choose to have your credit report frozen as a preventative measure before a potential security breach.

However, if you need to get a new credit card, rent an apartment or do anything else that requires a credit check, you’ll have to “thaw” each credit report.

Do you have questions about freezing your credit file?

Give me a call or email me at kaperik@gmail.com.

Until next month,

 Erik Kaplan

THD Credit Consulting | (800) 822-7120

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