Freezing Your Credit Report

Worried you may become a victim of identity fraud? Freezing your credit report may be the ideal solution.

If you're considering a debt consolidation loan, your credit report should be as accurate as possible. Also, if you have reason to fear identity fraud, freezing your credit report may be a good method for ensuring that it remains intact until you're ready to apply.

The big chill

Freezing your credit report is not an available option to all Americans. Thirty-nine states have passed laws making it accessible to consumers, but some of those states offer it only to victims of identity theft. If it's allowed in your state, you must directly call all three of the major credit reporting companies-Experian, Equifax and TransUnion-and request the freeze.

Once it's in place, the freeze can prevent any new credit cards from being issued in your name. Here's how the process works: Let's suppose that a criminal has obtained your Social Security number and other personal data, and applies for credit in your name. When the card issuer asks for your credit report, it will be told that it's frozen; as a result, no information will be given out. Because the issuer can't verify your creditworthiness, the application will be turned down. However, lawmakers warn consumers that some companies issue credit without looking at these reports, so credit freezes don't guarantee that there'll be no identity theft. The process will work the same way for you, as well-you may not be approved for additional credit while your reports are inaccessible.

Freezing your credit won't prevent you from receiving calls from telemarketers and offers of plastic in the mail. And it won't prevent your current credit providers from continuing to report your payment history, or keep you from using your cards. It simply locks your credit history from view. There's no charge for identity theft victims to freeze their reports, but they may be required to provide a police report. If you haven't been a victim, you may incur a charge.

Thawing out takes time

If you need to apply for new credit, you can request that the freeze be temporarily reversed by calling each reporting agency directly. After you request the thaw, it can take up to three days before the information will become available again. If you decide to permanently thaw your reports, there's no fee involved. A temporary thaw, however, does cost money, so adequate planning is required if you want to keep those fees to a minimum.

Whether you're looking for a mortgage, car loan, or debt consolidation loan, freezing your credit reports until you're ready to apply may be a great way to keep your information protected.