A credit freeze won't remove you from prescreened offers for credit and insurance lists, for instance. The fraud alert does that. They also aren't available to all consumers. As of this writing, states determine whether their residents may freeze their credit files and in which circumstances. Anyone can raise a fraud alert.
To set the credit record straight, we spoke with the credit industry about some of the biggest assumptions and added a few other questions we thought were important to clear up. Clearing the fog of confusion that hangs over credit freezes, here are the answers to some of the mistaken beliefs fluttering around.
May you be a little wiser about protecting your credit file from identity thieves.
14 myths about credit freeze:
1. Anyone can freeze his or her credit files.
2. Credit reports cannot get updated during a credit freeze.
3. Apartment providers can still run a credit check during a file freeze.
4. Current creditors cannot run credit checks on your report if the file is frozen.
5. Credit freezes stop prescreened offers for credit and insurance.
6. New creditors who request a credit report under a credit freeze will still receive your credit report, with a warning about possible fraud.
7. You can't check your own credit report or score under a credit freeze.
8. Once set with one credit bureau, the agency will automatically notify the other two of the credit freeze.
9. You can thaw a credit freeze within minutes.
10. You can't use your credit cards during a credit freeze.
11. Credit-monitoring services won't work during a file freeze.
12. If you give a company written consent to access your file, it can sidestep the freeze.
13. Credit freezes prevent identity theft.
14. Once removed, creditors will see evidence of an old file freeze.
1. Anyone can freeze his or her credit files.
No, anyone can initiate a fraud alert, but only residents in certain states have the right to freeze their credit. Some state laws restrict credit-freeze rights to identity theft victims. So far, no federal law bestows credit-freeze rights on all consumers. Residents of states with no credit-freeze laws in effect can only use fraud alerts if they are concerned about identity theft.
2. Credit reports cannot get updated during a credit freeze.
Think about it -- that just doesn't make sense. "An un-updated report wouldn't be useful to anybody," says Norm Magnuson, vice president of public affairs for the Consumer Data Industry Association. That would mean your report could potentially be frozen in time for years, he says. People with file freezes still have to pay their bills on time.
3. Apartment providers can still run a credit check during a file freeze.
An apartment application is treated like a new credit account, says Maxine Sweet, vice president of public affairs for Experian. New creditors cannot access your credit file during a credit freeze. Then again, a credit check may not affect your ability to rent an apartment. It depends on your landlord's criteria for apartment rental approvals, says David Rubinger, Equifax's vice president of communications. Check with the company first to see if it requires a credit check before granting new apartment rentals.
If a credit check denial will cost you the apartment, unfreeze your credit file in advance of applying -- it can take up to three days for the freeze to thaw. Ask the apartment staff which credit-reporting agency they use for credit checks and unfreeze the credit file kept by that bureau.
4. Current creditors cannot run checks on your report if the file is frozen.
They absolutely can. A credit freeze doesn't work against companies with which you have an existing relationship. They can still check your credit to see if you are paying other creditors as agreed. The credit freeze will only block access to your file if the request is for a new credit or insurance account.
5. Credit freezes stop prescreened offers for credit and insurance.
No, a credit freeze doesn't remove you from these mailing lists. If you want to remove your name from the list provided by Experian, Equifax, TransUnion and Innovis Data Solutions, the fourth major credit bureau, you may call (888) 5-OPTOUT or (888) 567-8688 or submit your request online at optoutprescreen.com. You can choose to opt out for five years, or permanently.
6. New creditors who request a frozen report will still receive it, with a warning of possible fraud.
That's actually the case with fraud alerts. A credit freeze prevents new creditors from seeing your credit report. New creditors will only receive a statement saying the file has been frozen, says Sweet. They will not receive a copy of the report.
7. You can't check your own credit report or score under a credit freeze.
Credit freezes do not block consumers from requesting their own credit files.
8. Once set with one credit bureau, the agency will automatically notify the other two of the credit freeze.
Unlike fraud alerts, credit freezes must be set up with each of the nationwide credit-reporting agencies individually. The credit bureau will not notify the other agencies of the freeze. If you have a freeze in place and are applying for a loan or a job, you will need to find out which credit bureau the company uses and unfreeze the credit file housed by that bureau.
9. You can thaw a credit freeze within minutes.
As of yet, that's not a reality. Unless you live in Utah, where residents may lift or remove a credit freeze within 15 minutes after submitting an online request -- and even they cannot do that until Sept. 1, 2008. Delaware residents will get the ability to thaw their credit freezes within 15 minutes starting Jan. 31, 2009. Until then, residents in eligible states have to wait up to three business days for freezes to thaw. So, if you want instant credit, you'll have to thaw ahead of time.
10. You can't use your credit cards during a credit freeze.
Despite what the term "credit freeze" might imply, you can still use your active credit cards without issue. The only time the credit freeze will pose a hindrance is when you apply for new credit. Unless you thaw your credit file, the creditor won't be able to check your credit report or score.
In the event you lose your wallet, the credit freeze won't prevent its finder from going on a shopping spree. You'll want to report stolen cards immediately to avoid paying for fraudulent charges.
11. Credit-monitoring services won't work during a file freeze.
Actually, they will, according to Steven Katz, spokesman for TransUnion's TrueCredit.com. The service might not alert you of new accounts, however, as long as the freeze remains. The freeze should block the opening of new credit accounts where a credit check is required for approval.
12. A company can sidestep the freeze if you give written consent.
Although many definitions of a credit freeze say that no one can access a consumer's credit file without the consumer's consent, that consent means something very specific. "You have to unlock your credit report," says Rubinger. "You can't just give them written permission."
You can temporarily lift the file freeze for a minimum of three days and up to 30 days. The credit bureau will need your personal identification number and identifying information when you request the temporary thaw. The creditor who will access your file will need your PIN, as well. For more information about temporarily removing a credit freeze, visit the Web sites of Experian, Equifax, and TransUnion.
13. Credit freezes prevent identity theft.
They should block identity thieves from opening new accounts in your name and taking out loans, but if the lender, service provider, landlord or insurance company doesn't look at your credit report, then credit could get issued in your name, utility accounts could be opened, apartments could be issued and insurance policies could be obtained in your name.
You'll still want to guard your personal information.
14. Once removed, creditors will see evidence of an old file freeze.
Once removed or lifted, credit freezes evaporate. No notation will chronicle your file's freeze. So, if a creditor denies you credit after your file has been thawed, something else may be to blame. |
