What is a credit freeze? No, it is not a Dairy Queen shake or a snowman in the shape of your credit card. It is a newer system enacted by all three credit bureaus to help those who are no longer using credit to preserve their reports and scores.
The best candidates for a credit freeze are retirees or those who have so much income they will no longer need to borrow for any purchase. Having a credit freeze does not limit your ability to use credit cards or current loans; it simply restricts the creation of new accounts. This can be an excellent tool to prevent identity theft and unnecessary credit erosion.
The freeze works for all three credit bureaus and limits lenders from accessing your credit files. Your credit is not completely turned off as current lenders can still view your report and have the authority to continue sending you pre-approved offers – even selling your information through their marketing departments. So, while it won’t eliminate all uses of your credit reports, it can dramatically reduce them.
While this may sound great for some, there are a few drawbacks. Credit freezes do cost money in the form of maintenance fees. They can also be a hassle to absolve. In order to allow a new lender to access your credit for a new account you must contact the bureaus and provide a special pin number. This can cause a delay of a few days.
Each bureau must be contacted individually, both to freeze and thaw the reports. The typical fee to freeze is currently approximately $10 per credit bureau, with a similar fee to eliminate the freeze.
Still, if you are retired or in a high income bracket, you are often a target for fraud. This sort of protection, in the form of a credit freeze, can be a great peace of mind. It allows you to focus on more interesting things in life than worrying about identity theft and other misuses of your credit. Even if you do decide to freeze your credit, it is always good to still use the free annual credit report check to look for problems or errors.
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