Security freeze

What is a security freeze?

A security freeze, sometimes called a credit freeze, is when you block access to your credit score, so this data won’t be released without your permission. The purpose of a security freeze is to avert unauthorized use of your credit score which, among other things, makes it difficult for someone to fraudulently obtain credit in your name.

Deeper definition

Before you obtain credit, credit providers normally check your creditworthiness by checking your credit score. A credit score is a number used to evaluate your credit risk and can be obtained from credit reporting agencies. These are companies that collect consumer credit information and sell that information in the form of a credit report.

To prevent someone from impersonating you and opening up a line of credit in your name, most U.S. states have passed laws that allow consumers to prevent unauthorized access to their credit scores by implementing a security freeze. A security freeze prevents credit providers from accessing your credit record.

A security freeze does not block all access to consumers’ credit records. Existing creditorsdebt collectors acting for creditors and government agencies with a proper search warrant still can access credit information. In some states, potential employers, landlords and insurance companies also can access frozen credit records.

Although there are a number credit bureaus in the U.S., there are only three that are nationwide, and these are the ones that can freeze consumers’ records. While a freeze is in place, no new credit provider can access your credit records.

To open a new account, you need to unfreeze your records. This can be done by using a unique PIN number supplied to you by the credit bureau.

Security freeze example

If someone steals personal information such as your full name and Social Security number, the thief can use that information to open an account in your name.

The unsuspecting credit provider contacts one of the major credit bureaus, obtains your credit score and opens the account; it’s a simple as that. However, if you have taken the precaution of implementing a security freeze, your credit information is inaccessible and the credit will be refused.

Have you checked your credit score recently? Use our free credit score facility to see how you rate.

 

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