Few things are more effective at fighting identity theft than credit freezes. When you freeze your credit, potential lenders can’t access your credit file to assess the risk of lending money to you. No risk assessment means no credit – so identity thieves can’t use your stolen information to create fake accounts in your name.
You can’t open new credit accounts in your name, either. When you’re ready to shop for a new home or refinance your existing one, you must temporarily remove (thaw) the freeze so lenders can assess your credit.
Fortunately, the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 removed credit freeze barriers by making them free and simple to apply and remove. If you request a credit freeze with any of the three major credit reporting agencies (TransUnion, Experian, and Equifax) over the phone or via a secure electronic connection and provide proper identification, the credit reporting agency must apply the freeze within one business day of the request.
It’s even easier to remove the freeze. The credit reporting agencies are mandated to remove a freeze within one hour after the request is made and your ID is verified.
If you prefer old-school U.S. mail, the agencies have three business days to respond upon receipt of a freeze or thaw request – removing one of the primary benefits of the new law.
Credit freezes should be placed with all three credit reporting agencies to fully protect your credit. Remember your passwords and PINs with all three reporting agencies, because you’ll need them to identify yourself and lift the freeze when you start mortgage shopping.
When you’ve identified a lender and you’re ready for the pre-approval step, check with the lender to find out which credit reporting agency they use. If your lender only uses one agency for verification, unfreeze that account and leave the others intact. If your lender uses all three credit reporting agencies, unfreeze all three accounts.
Even though a freeze can be lifted within an hour, you must be the one to lift it. If you’ve filled out the mortgage application and authorized a credit pull, the freeze won’t be lifted automatically. Thaw your credit at least an hour before you submit your application – and we recommend following up with the reporting agencies to verify the removal.
Don’t immediately re-apply the freeze after you submit your application. Lenders may need a week or two to complete their work. Stay in contact with your lender throughout the process. When your lender verifies that they are finished with your credit file, reapply a credit freeze to any thawed credit reporting agency account.
As closing approaches, your lender may need to pull your credit report a second time to verify that you haven’t taken on new debts that change their initial risk assessment. Check with your lender to find out if a second pull is necessary, and at what stage. It’s in both of your interests to have your credit thawed again at the right time. Otherwise, the closing could be delayed – and you don’t want uncertainty right before your home purchase closes.
Before you embark on your mortgage search, there’s one more credit-related step you should take. Check your credit reports at all three reporting agencies and review them carefully. Each credit reporting agency produces its own report, so your three reports might not contain all the same information. Therefore, it’s important to obtain a copy of each and review it on a regular basis. You can see your three credit reports today as part of a free MoneyTips trial.
Freezes will keep thieves from opening fake accounts, but it won’t keep them from abusing your existing credit accounts if they have your information. Check all accounts for any fraudulent charges or errors that could drop your credit score and disqualify you for a mortgage – or make you pay higher interest rates if you do qualify.
Protect your credit – protect your identity – protect yourself with a free MoneyTips trial.