As our world becomes increasingly transparent and all monetary transactions a click away, data privacy and security have become of utmost important. With credit cards being swiped every minute and funds being received and transferred electronically round the clock, protecting your money as well as your standing in the credit world has become imperative. Your credit report, which is your financial resume with your complete financial history, needs to be in safe hands. In case this information lands in the wrong hands, you might be a victim of identity theft, where someone might get their hands on your credit report. Placing a ‘credit freeze’ will help you in case of an identity theft scare.
What does a Credit Freeze Mean?
A credit freeze is a powerful tool that restricts access to your credit report. In case of identity theft, the thief might use your personal information to open a fake account in your name and may misuse it thereafter. Placing a credit freeze on your account will prevent such thieves from opening a new account in your name and getting a new credit line such as a loan or a credit card, because new lenders will not have access to your credit report.
How Can You Place a Credit Freeze?
You can contact the credit bureaus like CRIF, and place a credit freeze. You will need to provide them with your personal details for verification and identification. Once these are confirmed, the credit bureau will send you a unique PIN, which you must keep safe. You will need the PIN in case you want to lift the freeze. You can ask the credit bureaus to lift the freeze temporarily or permanently. The time required to lift the freeze depends on how the request is placed, i.e., online, by phone or over email. Typically, the credit bureaus lift the freeze within an hour if the request is made online or over the phone.
Let us look at some implications of placing a credit freeze.
○ Placing a credit freeze does not affect your credit score and neither does it stop you from getting your free credit report.
○ You can also open a new account if you wish to after temporarily lifting the freeze.
○ You will continue to receive offers from credit card companies for a new credit card despite the freeze.
○ Your current creditors and marketers will continue to have access to your credit report.
○ You can also give limited access to your credit report to a potential employer or a landlord for screening purposes.
○ Some government agencies may continue to access your credit report even if you have placed a freeze.
How is it Different From Fraud Alert?
A fraud alert is a way to alert the credit bureaus if you suspect you are at risk of identity theft. In case of a fraud alert, banks or lenders have to take additional measures to verify your identity before extending new credit. Unlike a credit freeze, a fraud alert does not block access to your credit report.
Related read: 6 Things To Do If You Become A Victim of Identity Theft
When Should you Use Credit Freeze & What are its Advantages?
A call or a notification from lenders seeking payments for an account you never opened might mean that you are a victim of identity theft. Further, if you suspect that someone might have used your name to open a new account or obtain a new credit line in the form of a loan or a credit card, you should immediately consider placing a credit freeze on your account.
The advantages of placing a credit freeze are:
○ A credit freeze is the most important way in which you can protect yourself from identity theft.
○ It prevents fraudsters from opening new accounts in your name.
○ You can prevent misuse of your financial information.
○ Your credit score remains unaffected.
Despite the various security layers in place, anyone in today’s world may be a victim of identity theft. Should you be one, all your efforts of building a strong credit score may go in vain! Monitoring your credit report and protecting it will go a long way! So, avail your free CRIF credit report every year and monitor it; you can access it even if you have placed a credit freeze!