The Benefits Of Freezing Your Credit

The process of freezing is often done when we want to "preserve" something or keep something intact

. On the other hand, the term "freeze" is often used when we want to put something in an inactive or frozen state. For example, many people who want to control their spending actually put their credit cards in the freezer to freeze them. Thus, if they feel the impulse to buy using their credit cards, they will have to go through the inconvenience of defrosting their credit cards and end up not using them at all.

Today, this same principle is applied to the process of credit freeze. By putting one's credit report on a freeze, it is locked away from the eyes of lenders or anyone who may attempt to check on it without your permission. In fact, even the owner of the credit report cannot take a look in his credit report unless he requests that the report be "thawed" or the freeze be elevated.

Usually, when your identity gets stolen, the thief would have the power to use your personal details to open new accounts in your name. When the bank asks for identification, they can easily give the information they stolen and after the bank checks on your credit report, the new account can be approved and the thief will be free to make unauthorized charges without your least awareness, leaving it up to you to pay for these charges.

This possibility is eliminated by putting your credit on freeze. How? When the thief attempt to open a new account, the creditor will observably make an effort to check on your credit report. However, the creditor will only get a message that your report is inaccessible because it's on a freeze. Thus, the new account will not be approved and the thief will fail in his attempt to use a new account for fraudulent charges.

Although fraud alert is an option for people who suspect identity theft, some creditors can actually ignore the alert and instead of notifying first the owner of the credit report, a lender may choose to immediately approve the new account without making any steps to verify if it's a valid request or not.

Things to do to freeze your credit report? Requesting a fraud alert can be done by calling up the credit bureau but a credit freeze requires the credit report owner to send in a letter of request through a registered post mail. At least 2 copies of proof of residency must also be submitted along with the letter. And a service fee of $10 to $12 is also necessary for each credit bureau.

Once a credit freeze has been imposed, the credit report stays frozen for an unlimited period unless a request to unfreeze has been made. For instance, if you want to apply for a loan or a new credit card, you will have to unfreeze your credit so your lender can check on it. In this case, a fee of $10 to $12 is again compulsory to get the PIN code required to unfreeze the account.

Copyright (c) 2010 Suzy Vanstrusen

by: Suzy Vanstrusen

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