Problems With Facing a Credit Freeze

A credit freeze is a hold that individuals can place on their credit accounts preventing anyone, including themselves, from opening new lines of credit in their name. Every state in the United States allows this process, although some only allow it after identity theft. Even though there are benefits there are also problems with the process.

Cost

A credit freeze almost always costs something unless you have been the victim of identity theft. Forty three states allow individuals who have not had their identity stolen freeze their credit, either temporarily or permanently. The other states only allow credit freezes when identity has been stolen. These states include Arkansas, Hawaii, Kansas, Mississippi, South Dakota, Texas and Washington. In the states where it is permissible to freeze your credit at any time, the fee ranges from $5 to $20 for each of the three credit companies Experian, TransUnion and Equifax. Many states also require a similar fee when lifting the freeze.

Lending

The main drawback of a credit freeze is that you cannot open any other lines of credit until the freeze is lifted. The credit line could be for anything. House, car, personal loan, business loan, store financing, credit cards, student loans and any other line of credit cannot be opened during a freeze. The credit freeze generally lasts for a specified period of time, but sometimes the freezes are in place until you personally lift the freeze. This can be a huge drawback for your life, especially if you have unforeseen circumstances that make the opening of a line of credit a necessity.

Identity Theft

Even though a credit freeze can help stop identity theft, it will not prevent it. If someone steals your identity, they can still use it to create damage in your name, even if there is a credit freeze on your name. Identity thieves can use other methods to make purchases or commit crimes in your name. In general, however, a credit freeze goes a long way toward stopping identity theft, as most thieves only want the credit they can get in your name.

Lifting the Freeze

Another problem with facing a credit freeze is lifting the freeze. In addition to the fee that you usually have to pay, there are other complications to the process, as well. First you have to obtain a special pin number from each of the credit bureaus. Sometimes this number is issued when you freeze the account, but other times it is a separate transaction. The pin number is usually only good for a certain number of days. After you give the number to the credit bureau, it usually takes several days for the lift to go through. This can be a hassle with time sensitive transactions, such as a house contract.