Should You Freeze Your Credit After Identity Theft?
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Identity theft can be hugely damaging to your credit — especially if, like many people, you only catch it once you have been denied a new credit card or loan.
When a scammer steals your identity, they might be able to open new credit cards, take out loans or even access medical care under your name, leaving you with a history of unpaid bills.
However, if you have been a victim of identity theft, there are simple, effective steps you can take to protect your credit from this point onward, including a credit freeze. Read on to find out more about what a credit freeze is, its advantages and disadvantages, and other alternatives to protect your credit history.
What is a credit freeze?
A credit freeze, also known as a security freeze, is a protection you can request from the major credit bureaus that limits access to your credit report. When your credit is frozen, most creditors cannot view your report unless you lift the freeze, which can prevent new credit accounts from being opened under your name.
It’s important to note that other third parties — such as employment screening agencies and existing creditors — can still view your report. (Although in the case of employment screening, they can only do so with your signed authorization.)
Why freeze your credit after identity theft?
Freezing your credit is just one of several important steps you’ll need to take if you discover your personal information has been compromised or your identity has been stolen.
This particular step is extremely important, however. If a scammer tries to open a new account under your name, the lender won’t be able to check your credit file and will deny their application. Stopping them in their tracks will prevent further damage to your credit history and credit score.
Do note that when you do decide to apply for a new line of credit — say a credit card or a loan — you’ll have to manually unfreeze your credit. However, credit reporting agencies make this process really easy, as you’ll see below.
How to freeze (and unfreeze) your credit
Because ID theft has become so common, the major credit bureaus have made the process of freezing your credit quick and simple. In fact, you can freeze (or unfreeze) your credit in minutes directly on the bureaus’ websites.
You’ll need to create an account with each and provide personally identifying information such as your social security number. Once you have an account, you can freeze and unfreeze your credit (either indefinitely or for specific periods of time) on that same page.
You should freeze your credit with all three credit reporting agencies as each lender uses different bureaus, sometimes one or two. Say you freeze your credit with TransUnion, but not Experian or Equifax – if so, a scammer could open an account under your name if they happen to apply to a lender that verifies credit using the other two bureaus.
Alternatives to a credit freeze
If you don’t want to freeze your credit, you could request a fraud alert instead. (If you’re in the military and are about to be deployed, then you should consider an active duty alert.)
A fraud alert lets creditors know you’ve been a victim of identity theft. With this alert, any lender that receives a credit application using your information is required to contact you to confirm it was really you who made the request.
Unlike a credit freeze, a fraud alert doesn't need to be removed if you were to ask for a new credit card or line of credit. However, you should keep in mind that if you ask for a new credit line or card, you might be required to provide additional evidence of your identity.
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