Know the Consequences of Security Freeze Before Applying for It

A security freeze on your credit report is an extreme measure. No doubt it will give you immediate protection against identity thieves. However you are out of the credit market during such a freeze. So you should use it with caution.

A security freeze is used to prevent unauthorized access to people looking at your credit report. However, it is a very sharp tool and can bring you a lot of inconvenience.

Consider the following consequences before you go ahead with the freeze -

1. If you are changing job and moving to a new place, many service providers would like to see your credit report. The utility companies providing electricity and water service, car dealers, telephone companies and your new landlord would check your credit report with the credit bureaus. All these agencies may deny you services in case they are unable to check your credit report. Even your prospective employer would like to have a look at it. If he is refused, it may cost you job.

2. It is not the solution for all kinds of identity theft. If someone uses your existing credit card or existing account, a security freeze cannot prevent him. There is a possibility that an identity thief can avail services like telephone, wireless even without a credit check.

3. It is not possible for you to lift it very quickly. It may take up to three business days and you may lose lucrative time bound deals. You will not be approved on the spot.

4. Your existing creditors and existing service providers will not be affected by this security freeze. They will be able to access to your credit report in spite of this freeze.

5. Sometimes, it may affect your normal transactions. For example, if you are buying a car on cash terms, the dealer may still refer to your credit report as a routine and you cannot prevent him to do that. In that case, the dealer may refuse to sell you!

6. Your request for a security freeze will not have any effect on the credit report of your spouse. When you think of a freeze, you should request it for both of you.

There are other alternatives available in the market like appointing a credit monitoring agency to keep continuous watch on your credit report. Such agencies will provide you alerts whenever someone views your credit report. There is another option of 'fraud alert' which you can provide you more protection.

As security freeze denies access to many organizations with whom you may be dealing frequently, you should consider carefully whether it is right for you before requesting it.