Credit Report Freeze

21 Feb 2008 by Chetan Shah.

Protecting one’s credit should one of the topmost priorities of any individual in this highly “credit” driven world. Identity theft can literally ruin one’s personal finance life for quite sometime. Hence the need to protect one’s credit report by all possible means.

Most of banks, insurance companies and credit reporting agencies are offering “credit monitoring service” so that the individual is notified when someone looks at their credit report, this typically happens when an individual applies for a loan, credit card, cell phone connection etc. In the event that the individual did not authorize the transaction, this service helps the individual to immediately notify the bank/police that someone tried to steal their identity. While this is a good service to utilize, I think freezing one’s credit report is an efficient and cheaper option.

By freezing one’s credit report, no one can view your credit report until you “thaw” it. Thus preventing anyone from getting a loan, mortgage, credit card etc on your name without your authorization. Once the credit report is frozen, I do not see any need of subscribing to a credit monitoring service as it is redundant if not useless.

When an individual submits the request to freeze her credit, the credit reporting agency issues a personal identification number (pin #). In future when the individual has a need to get a new credit card, mortgage etc., all she needs to do is call the credit reporting agency and mention her pin# and other personal details and if all data supplied by her is accurate the credit reporting agency will temporarily lift the freeze (thaw), the freeze can be lifted for the duration specified by the individual. The individual also has an option to selectively lift the freeze. I.e : if she knows that she is going get the credit card from Bank XYZ then she can mention that she only wants to lift the freeze so that only Bank XYZ can look at it, this way her credit report will appear frozen for all other companies.

Agreed that there is a one time charge to put the freeze on the report and a charge to lift the freeze but I think it would be unwise to try to save 30-40 dollars and potentially spend a lot more to clean your credit report after an identity theft incident, leaving aside the mental stress that you will have to go through.

Steps to freeze credit report are dependent on the state in which you reside. Please click on the link to determine the steps for your state.

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