Credit freeze 101 is meant to help you protect your credit. Let’s say that you find out that your identity has been stolen and someone has applied for a credit card in your name. In this case, it is imperative to “freeze” your credit with all three bureaus before opening a new account or getting one in the mail. If you do not freeze it, then anyone can take out a loan and use it as collateral for their own personal items.
Benefits of the credit freeze 101
1. Prevents someone from opening credit accounts in your name.
This is the only thing that can combat identity theft. Blocking a social security number or credit card information will prevent someone from getting a new account and taking out loans, which can lead to identity theft.
2. Prevents someone from applying for a loan in your name.
If they opened one in your name, they can apply for loans against it and use it as collateral on their own items, which will be negated if you freeze your credit.
3. Prevents damage to your credit score by only having small amounts of debt on your file and no new accounts being opened in the past 3 years.
This is true if you are planning on applying for credit in the near future, such as applying for a mortgage or car loan. If your credit is frozen, you will automatically have a freeze on your score and new accounts applied for in the past 90 days will not be taken into consideration when determining your score.
4. Avoids having to pay fees for each bureau.
There are fees for each credit bureau that you must pay in order to freeze and unfreeze your credit. However, the fees are different for each bureau, some being free and others being up to $20.
Where to freeze your credit?
You can freeze your credit with any of the three credit bureaus or all of them if you are trying to be extra cautious or have experienced a breach in security with one of them. If you live in Florida you can contact them as well as long as you have a valid reason why you need the freeze. The other states that allow freezing without a valid reason is Hawaii, Illinois, and South Carolina.
