There might be some situations when it sounds reasonable to freeze your credit: if you have become a victim of identity theft, or simply do not want certain creditors to view your credit report. But credit freezes have some disadvantages that consumers should be aware of before freezing their credit reports with Equifax, Experian, and TransUnion:
Loss of Immediate Access The primary disadvantage of placing a credit freeze is the time it will take for one to unfreeze the credit when they require credit. Whenever you fill out a mortgage application, credit card, or auto loan, the lender will have to pull your credit report and scores. While a credit freeze is active, the bureau cannot display your reports, and you will have to thaw the freeze at each bureau. The time it can take to thaw a freeze usually varies with the state you reside in and may take up to 3 business days. This means that the overall cycle of lending is slowed down because of the time that is taken to complete any one of the processes. However, this service is not advised if you require credit immediately or are already applying for a particular time-sensitive loan.
Credit Reporting Agency Fees for Limited Unfreezing Some states permit credit reporting agencies to request fees for placing a freeze, temporarily thawing, or unfreezing credit. In each bureau, the fees are usually between $3 and $10 for each action. If you require a freeze to be lifted because you are applying for a credit/burg check, you have to pay them all the amount to lift the freeze, then pay again for them to place the freeze back after a given period. This can become an expensive option each time you require credit as this company’s charges imply.
Difficulties With Background Checks It affects your ability to prevent employers from running a background check on you when considering you for a job. Any employer, who is likely to conduct an employment background check, will conduct a credit check. They usually hire a background check company that runs your credit history to search for any anomalies that can bar you from employment, like wrong credit records, collections, or bankruptcies. They cannot perform the credit check with a freeze in place while you lift the freeze on each bureau temporarily. This is because it may take some time to request a freeze lift with each of the bureaus once the freeze is put in place.
Problems With Insurance Applications Like background checks, you may experience some issues when seeking a new policy or modifying an existing auto, health, or homeowner’s insurance policy when your credit reports have been frozen. Other credit-based measures that insurers will commonly turn to for pricing policies and applications include credit insurance scores. This is true because if the credit reporting agency does not have access to your credit reports it causes problems and holds up. At the bureau, you may be required to thaw the freeze for a while to allow the insurer access to your reports.
Rejected Credit Cards and Loans Before Approval Your credit is first checked by banks when you apply for pre-approval for credit cards and loans. They utilize your credit data to decide if you meet their pre-qualifications and whether to directly offer you the cards. When one has frozen his or her credit, banks, and lenders are unable to check the credit file to see if you are eligible for credit or not. This means that you probably won’t get solicitations for pre-approved credit in the mail while your reports are frozen. That cuts the possibility of quick access to credit cards and loans.
What if You Can’t Monitor Your Credit Reports and Scores Consumers must make regular checks of their credit reports and scores and identity thieves take advantage of such failures. When one freezes their credit, it removes the individual’s option to check their credit reports or see credit scores. While it is legal, credit bureaus only offer the free annual credit report and credit score to the user with an unsaturated credit profile. In case you have an active freeze, you are not able to enjoy and monitor these free benefits and your reports. Many of the consumers monitor their credit reports, ranging from a few times a year to identify any arising issues. Having your credit frozen is the exact way that you are unable to recognize that you have been a victim of identity theft.
Taking time to receive credit after the freeze is another strategy. This is because, due to the time taken which ranges from one to three business days for the bureaus to process requests for the freeze to be lifted, the approval of credit applications is also affected. It puts a lock on your credit reports and bars lenders from gaining access to them until the freeze is lifted. Depending on the time it takes to process the request especially if it was requested over the weekend, it can take up to 5 actual working days before a lender can get access to your credit reports if you had a freeze on your credit report. This gets incorporated into the loan approval process and thus leads to the delay.
It is however important to understand that even if spouses may not get affected by HIV directly, they are also not immune from being affected in one or other ways. Freezing your credit but leaving your spouse’s credit unfrozen, does not guarantee the entire household against identity theft. Most of the time the couples share all or some of the account details and passwords. But if your spouse does not freeze credit as well, criminals could obtain credit using your spouse’s identity if it is exposed. It means that your credit freeze is not as comprehensive as you may have wanted unless all members of your household freeze credit reports.
Credit Monitoring Services Keep Consumers from Accessing Some consumers rely on the services that track their credit reports to identify early signs of identity fraud. These services let you know when there is a new account opened, when your score changes, or when there are suspicious items in your report. Given that credit freeze means monitoring services cannot run checks on the credit reports every month to find out changes that may signify fraud. A credit freeze inhibits the very access, these services need to detect fraudulent activity on consumers’ credit profiles.
Conclusively, credit freeze mitigates the ability of identity thieves to open credit in the victims’ name but causes a set of issues, additional time, and cost when applying for credit. Although there is the potential for increased privacy and a decrease in identity theft, consumers should consider these advantages and disadvantages before deciding whether or not it is in their best interest to put a freeze on their credit reports.
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