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Freezing Reports Fights off Scammers

By Faye Mergel
Published: Wednesday, July 21st, 2010

200156531-001Many Americans have no idea that freezing their credit reports can actually prevent scammers to gain access their credit history. Credit report freeze or security freeze is a method where the credit card reporting agencies block or lock the data contained in credit reports of cardholders. It is done upon the customer’s request to disallow others from viewing the credit history. The customer is also not allowed to open a new credit account while the credit freeze is taking place. The credit freeze can be lifted or unblocked if the customer decides to remove the ice.

Freezing a credit report is started by contacting all of the three credit card bureaus – Equifax, Experian and Trans Union – and requesting each of them to freeze the reports. The credit card holder pays each of the bureau $5 – $20 each, or a total of $15 – $60, for the process. The case would be different with identity theft victims who are mostly charged for free. Each bureau issues the holder a pin number which will be used once the holder decides to release the credit report.

The process is known to be an effective way to prevent identity theft. The bureau will notify the cardholder once someone tries to apply an account using the cardholder’s name. This means that the financial data obtained by scammers won’t be of use if they can’t apply for a new account or apply for a loan.

Supporters of freezing credit reports say that this method effectively keeps off spammers from making credit transactions under the cardholder’s name. It is best used when the cardholder’s purse or wallet is missing or when the card holder is already a victim of an identity theft. For cautious cardholders, credit card freeze is an effective way to become at ease.

Like any other anti-spam methods, freezing has its set of downturns. Since freezing blocks anyone from viewing credit reports, even employers and banks and other credit card companies can’t know the cardholder’s history. This may cause a delay or prohibit the cardholder from getting new loans, credit, employment and house financing. Furthermore, freezing doesn’t guarantee pure security since theft can also happen to existing accounts and not just by opening new accounts under a cardholder’s name. Others have difficulty in processing the freeze because they have to send three different letters and pay three fees when they request for credit report freeze. Every time the cardholder freezes or thaws their blocked reports, all three bureaus must be updated.

Credit freeze is a much recommended way of dodging spams or identity theft. But credit cardholders are still exposed to some risks and dangers that cannot be solved solely by freezing reports. Cardholders must constantly update themselves with new schemes of theft and be aware of the measures to avoid being victims of these crimes.

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