A Complete Guide: What Is A Credit Freeze And Why Is This Helpful?

Due to recent changes in federal regulations, consumers are now allowed to freeze their credit free of charge. Prior to changes in these regulations, credit bureaus would charge consumers for freezing their credit. What does this mean, and why might someone want to do this?

Freezing Credit Restricts Access To Confidential Information

There are certain situations where consumers may need to have access to their credit reports. For example, they may be applying for a home loan or a car loan. There are other situations where consumers may not need access to their credit reports for an extended amount of time. In this case, it is possible to freeze the credit report to restrict all access. This makes it harder for hackers to access confidential credit information, preventing them from opening an account in someone else’s name.

Who Can Freeze Their Credit Reports?

All consumers have the ability to freeze their credit reports. Even some children may have a credit history, so it is possible for parents to freeze the profile of a child for a certain amount of time. This prevents hackers from stealing credit information regarding children as well. 

How Can Consumers Freeze Their Credit Reports?

It is relatively easy to conduct a credit freeze at any of the three major credit bureaus including Equifax, Experian, and Trans Union. All consumers need to do is request a credit freeze via a phone call,  letter, or an online request. The bureau has to comply, freezing someone’s credit report within one business day. Furthermore, consumers should be able to access free fraud alert services as well. That way, individuals will automatically be alerted if someone tries to open an account in their name. 

What Happens When Applying For A Loan?

If applying for a loan, consumers need to unfreeze their credit reports. Therefore, they should file a request with all three major credit bureaus. They will have to comply within one hour. Then, after the lender has the information he or she requires, consumers can simply request a credit freeze again. That way, they limit the opportunities of hackers who might be trying to steal confidential information and commit identity theft.