While the January winter temperatures outside may be below freezing, there is another type of freeze that can be extremely helpful should someone fraudulently obtain your Social Security number. Once you learn that someone is actively using your Social Security number, you must take immediate action. Despite myths furthered by television and radio advertisements, locking down your credit is relatively inexpensive and simple to do.
What is a credit freeze and how does it work?
A credit freeze—or security freeze as it’s also commonly known—means that your credit file cannot be shared with potential creditors. How does it work?
- A creditor will check an applicant’s credit report before extending credit. If a creditor fails to perform a credit check on the credit application, they can grant credit to an individual using your fraudulent identity.
- With a credit freeze, even if someone has all of your personal information such as name, birth date, address, photo identification, and your Social Security number, no information found on your credit report will be provided. Without this information, usually the granting of any credit is denied.
Credit freeze legislation was passed in Ohio and became effective in 2008 with the passage of House Bill 46. Be aware that every state has different credit freeze rules and regulations.
Credit freeze costs depend on whether you are a victim or whether you are being proactive. Should you be a victim of identity theft and someone is actively using your social security number, which you can prove with a copy of a police report, the cost of freezing your credit is free.
However, for example, if your wallet or purse is stolen and contained your Social Security card and driver’s license, you may want to do everything you can to prevent yourself from becoming an identity theft statistic. The preemptive move of freezing your credit will cost $5 per credit reporting agency. (There are three credit reporting bureaus Experian, Equifax, and TransUnion.) You should freeze your credit at each of them.
The credit reporting bureau will freeze your credit within three days of receiving your application sent by certified mail or applying via their respective websites. Specific information must be provided during the freeze application process. During this time, you credit score is not available to prospective creditors and they will be notified that your credit file is frozen. Those that had previously granted you credit still have access to your file as long as they do not use it for granting additional credit. The freeze truly stops the granting of new credit.
Remember, a credit freeze completely stops inquiries on your credit – even for you. You can lift the credit freeze or grant a specific creditor access to your report, coincidentally called a “thaw”, for $5 per credit reporting agency. There are specifics steps to follow in order to initiate a “thaw”.
Just like our fluctuating cold Northeastern Ohio winters, you too can experience freezes and thaws as it pertains to your credit.
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