Freeze your Credit Report at least.
Several people have asked me "what is a credit report freeze?", "Is this better than a Fraud Alert?" and "should I freeze my credit report?". I will break it down to make it easier for you to decide.
What is a Credit Report Freeze?
A credit freeze is a way to lock down your credit report to make it very difficult for an identity thief to open an account or get a loan in your name. Sounds great right, but remember it not only prevents an identity thief from opening a new account, it also prevents YOU from obtaining new credit. That's right, when your credit report is frozen, new lenders, new creditors, insurers, potential employers, and even you will not be able to access your credit file. Now that's frozen!
Don't worry, you can have the freeze lifted, but it does take time. Each bureau (Equifax, Experian and Trans Union) will have a procedure on how to lift the freeze. It may take a few days and some secure passwords or a personal identification process, but it can be done. I guess this prevents impulse buying.
A couple of things to remember...
- A Credit Freeze is not Free -- there are costs to freezing your credit. Anywhere from $2 to $10, as well as a fee for lifting the freeze.
- A Credit Freeze only prevents NEW accounts -- Don't worry, you can still use those credit cards you have open. You just shouldn't can't get any more.
- A Credit Freeze does not prevent "soft" hits -- Your current lenders will still have access to your credit reports to see how well you are handling your debt.
A credit report freeze is a powerful tool if you understand it's pros and cons, but is it right for you?
Next time I will cover the difference between a Fraud Alert and a Credit Freeze.
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