In today’s digital world, where personal information is increasingly at risk, protecting your finances is crucial. A credit freeze is a key anti-fraud tool that helps shield your financial information if you suspect your identity has been stolen or compromised.
So, what’s a credit freeze all about, and when should you consider it? We’re going to break it down in simple terms: how it works; when you might need one; how to set it up; and any bumps you might hit along the way. Here is how a credit freeze can help protect your finances.
What Is a Credit Freeze?
A credit freeze is a proven anti-fraud tool that will stop your credit report from being shared with any third parties. It’s the same principle behind cancelling a credit or debit card when lost or stolen. The key point here is that if your identity is stolen and someone intends to take out credit in your name, they will need to share your report with prospective lenders. A freeze makes this impossible.
How Long Does It Take To Activate a Credit Freeze?
You will need to speak to Experian, Equifax and TransUnion. They are the UK’s 3 main credit reference agencies and each maintain a separate report on your credit history. Only contacting 1-2 of them will not provide you with full coverage.
You can connect with the Equifax credit freeze, the Experian credit freeze, and the TransUnion credit freeze teams by clicking these links. They will ask a series of screening questions to prove your identity. While this may seem stressful and time-consuming, it is ultimately for your benefit and the best way to regain control of your borrowing power.
When Should I Conduct a Credit Freeze?
Suspicious phone calls, text or email alerts, and unexplained activity within any of your existing accounts should all be immediate red flags that something is wrong. If in doubt, put a freeze in place and you can always remove it later. You will be asked to create a PIN to lift the freeze during the freezing process, you can then enter this online at any time when needed.
If you come to the point where you feel a credit freeze is needed, it is also a timely move to reassess how you’re protecting your private information. The Information Commissioner’s Office is responsible for issuing official guidance and recommends the following best practices:
- Shredding all paperwork and letters that contain personal or financial information
- Using two-factor authentication as standard on all of your online logins and digital profiles
- Creating unique passwords for everyone online service you use and managing them with a digital keychain, rather than a physical written record or note on your phone
Did you know that a household income is the total gross income of a household within a 12-month tax year? Learn more about it here.
How Will a Credit Freeze Protect Me?
Any would-be thieves will not be able to access your credit reports and send them to prospective lenders. Lenders are obliged to see your credit reports before agreeing to lend because they have to prove that your loans are affordable and will not lead to financial hardship. Breaking this connection means thieves cannot exploit your borrowing power for their own gain.
What proof of ID is needed for a credit freeze?
Screening questions will be asked over the phone by a trained credit freeze specialist:
- The process will begin with the basics such as your full name, address, and any reporting or ID numbers generated by that agency
- You will typically be asked to submit images of your photo ID (passport or driving license) via a real-time app
- It is common practice for you to be asked to set a unique PIN that can freeze and unfreeze your credit online.
Can I be stopped from freezing my credit?
No, this is a personal choice and not one that anyone else can make on your behalf. While you have the right to freeze your credit at any time, it’s important to note that it is not a 100% safeguard against all forms of financial fraud and theft.
Credit freezes will not stop a thief from compromising and using an existing credit card or current account — only from applying for new sources of funding.
Protecting yourself from identity theft
A credit freeze should be your first port of call when you suspect your identity has been stolen or compromised in any way. You must contact each of the 3 leading reference agencies to get complete coverage. You will find the links in the first part of this article and you will have to prove your identity, so have your photo ID and financial information ready.
FAQ’s
1. Where can I learn more about the official guidance on identity theft?
Click here to read the Information Commissioner’s Office’s latest guidance and guidelines on how to avoid all forms of identity theft.
2. Does a credit freeze damage your credit score?
No, there will be no impact on your credit score. This is purely an anti-fraud device set up to keep you safe if you suspect your identity has been stolen or compromised.
3. Does a credit freeze protect your current account?
No, unfortunately, this is not the case. A credit freeze will only stop thieves from opening new accounts and securing new sources of funding, not from accessing existing accounts.
