In 2021 an estimated 42 million Americans had their identity stolen.[i] With the growing prevalence of data breaches and cybercrime, it’s no surprise that identity theft is on the rise.
Dealing with identity theft can be upsetting, expensive, and time-consuming. Fortunately, there are ways to guard against it. One tool consumers can use to protect themselves from credit-related fraud are credit freezes.
Below, we’ll answer some credit freeze FAQs and discuss how credit freezes can impact the credit application process.
What is a Credit Freeze?
A credit freeze is a service provided by the nationwide credit bureaus (Equifax, Experian, and TransUnion) that restricts access to your credit reports.
When a credit freeze is in place, lenders won’t be able to access your credit reports during credit applications. Lenders rely heavily on credit reports during the underwriting process, so restricting their access can greatly reduce your chances of getting approved.
Thus, if a cybercriminal tries to apply for a new credit account under your name, chances are they won’t be able to complete the application.
Who Can View Your Credit Reports While They’re Frozen?
While new lenders won’t be able to check your credit reports when they’re frozen, they will still be accessible to:[ii]
- Lenders of your open credit accounts
- Debt collection agencies
- Some government entities
- Credit monitoring companies
- Employers (if you’ve given them permission)
- Utility companies
- Auto insurance underwriters
How to Set Up a Credit Freeze
If you want to protect your credit, you’ll be happy to learn that setting up credit freezes is a simple process. All you have to do is contact each credit bureau and request a credit freeze. You can do so by phone, mail, or online.
Here is each of the credit bureau’s credit freeze contact information:
During your credit freeze request, you may be asked to provide your:
- Current home address
- Former home address
- Social Security number
Once you submit your credit freeze request, the credit bureaus have one business day to fulfill it.[iii] The only exception is if you apply by mail—in this case, the credit bureaus have up to three business days. You should receive a written confirmation about your credit freeze within five days of filing your request.
How Long Does a Credit Freeze Last?
Credit freezes typically stay in place until you remove them, though they may be lifted automatically after seven years in certain states.
Do You Have to Pay to Freeze Your Credit?
In the past, credit bureaus were allowed to charge fees for their credit freezing services. However, federal law made credit freezes free in September 2018.[iv]
Can Credit Reports be Frozen by Anyone Besides the Consumer?
Yes, there are a few instances where someone’s credit files may be frozen by someone else on their behalf. People who have signed Power of Attorney or court-ordered permission may be able to freeze the credit of an adult who is incapacitated. Likewise, parents may be able to freeze their children’s credit reports while they’re under the age of 16.
In these cases, you will need to provide documents during the credit freeze request that verify:
- Your identity
- The incapacitated adult or child’s identity
- Your legal permission to act on their behalf (as shown by a signed Power of Attorney, court order, birth certificate, or foster care certification)
How to Unfreeze Your Credit
When you’re ready to apply for a new loan or credit card, you’ll need to unfreeze your credit reports first. You can unfreeze your credit reports permanently or for a temporary period of time.
To initiate this process, simply contact the credit bureaus and ask them to lift your credit freezes. Here are the phone numbers you can call:
- Equifax – (800)-203-784
- Experian – (800)-509-8495
- TransUnion – (888)-909-8872
The credit bureeaus are required to unfreeze your credit reports within one hour of your request—that is unless you submit your request by mail, in which case they have up to three business days.
Can You Get a Mortgage With a Credit Freeze in Place?
If you apply for a mortgage, your lender will most likely try to pull a tri-merge credit report. Tri-merge credit reports combine data from all three of your credit reports.
If one or more of your credit reports is frozen, your lender won’t be able to complete this credit pull. For this reason, it’s a good idea to make sure that all three of your credit reports are unfrozen before you apply for a mortgage loan.
How Many Credit Pulls Take Place During a Mortgage Application?
During a mortgage application, your lender may pull your credit report several times. For instance, they may need to check your credit:
- When you apply for prequalification – Applying for prequalification can let you know if you meet a lender’s basic eligibility requirements. During a prequalification application, your lender will need to check your credit using a soft pull credit report. This does not impact your score, so if you are shopping for the best term you should not see an impact from this soft credit pull.
- During the formal application – When you fill out an official mortgage application, your lender will take a closer look at your credit using a tri-merge credit report.
- Throughout the quiet period – The quiet period takes place between your initial credit pull and loan closing. On average, the quiet period can last anywhere from 45 to 60 days.[v] Lenders may want to monitor your credit continuously during this period to make sure you don’t take out other credit accounts or rack up large credit card balances. Any new debt you take on during the quiet period could push you out of your lender’s approved debt-to-income ratio thresholds and terminate your loan.
- Upon closing – Even if your lender doesn’t monitor your credit throughout the quiet period, they’ll most likely pull your credit report one last time before closing. Lenders do this to make sure that your credit is still in good standing before they officially grant you the loan. Fannie Mae and other mortgage investors may require lenders to take this step to sell their loans on the secondary market.[vi]
As you can see, mortgage lenders may need access to your credit reports multiple times throughout the origination process. With this in mind, it’s a good idea to ask your lender how long you should unfreeze your credit if you only intend to do so temporarily.
Do Credit Freezes Impact Other Types of Financing?
Credit freezes can impact all types of credit applications, from auto loans to credit cards. After all, their purpose is to prevent someone else from taking out new credit accounts under your name.
How Do Lenders Determine if a Credit Freeze is in Place?
If you’re a mortgage lender, you may be wondering what credit freezes look like on your end. You can assume an applicant’s credit is frozen if you try to pull their credit reports and you can’t access them.
To avoid this issue, it’s always a good idea to remind your borrowers to unfreeze their credit reports at the start of the application process. You may be surprised to learn how many applicants forget their credit is frozen.
Are There Any Alternatives to Credit Freezes?
Credit freezes are just one tool consumers can use to protect their credit reports.
Here are three credit freeze alternatives:
#1 Credit Monitoring Services
Credit monitoring is a service that sends you alerts any time suspicious information reaches your credit reports. Unfortunately, once this type of activity hits your credit reports, it’s often too late to do much about it. You may already have a fraudulent credit account listed under your name.
#2 Fraud Alerts
If you suspect that your personal information has been compromised, you can file a fraud alert with the credit bureaus. When you have fraud alerts in place, lenders must take additional steps to verify your identity before granting you new credit or increasing your credit limits.
There are three different types of fraud alerts you can choose from:
- Standard fraud alerts – Standard fraud alerts typically last for one year, though you can request to remove them earlier than that.
- Extended fraud alerts – If your identity has been stolen and you’ve filed a police report, you can request an extended fraud alert. This type of fraud alert stays active for up to seven years.
- Active duty alerts – The final type of fraud alert is only available for active duty service members. This type of fraud alert lasts one year, but it can be renewed throughout the duration of your deployment.
Unlike credit freezes, you only have to file a fraud alert with one credit bureau to gain protection from all three. The credit bureau you file with will inform the other two on your behalf.
#3 Credit Locks
Credit locks are another service provided by the credit bureaus that operate very much like credit freezes. Unlike credit freezes, some credit bureaus charge for their credit locking services.
While credit locks cost some money, they’re a lot more convenient. Rather than waiting hours to freeze and unfreeze your credit reports, you can lock and unlock them instantaneously in a few clicks.
Certified Credit: Innovative Credit Solutions for Mortgage Lenders
As you can see, credit freezes can help protect against identity fraud for consumers and lenders alike.
If you’re a mortgage lender looking to reduce fraud, we offer many helpful fraud and risk mitigation tools here at Certified Credit. In addition to our affordable credit reports, we also provide:
- Two-tiered wire fraud prevention
- Liens and judgment reports
- MERS lien reports
- 1040, W-2, 1099, 1120, and 1065 tax transcript verification
- SSA89 Social Security number verification
- Real-time identity theft protection
- ID risk review
Want to safeguard your mortgage lending business? Schedule a fraud and risk mitigation demo with our team of credit experts today.
[i] AARP. Identity Fraud Hit 42 Million People in 2021.
[ii] Experian. Who is Notified When Your Credit File is Frozen?
[iii] CFPB. What does it mean to put a security freeze on my credit report?
[iv] FTC. Free credit freezes are here.
[v] The Mortgage Reports. How long does it take to close a mortgage? Timeline to close.
[vi] Fannie Mae. What is required if additional debt or reduced income is discovered after the underwriting decision?