Credit reports play a significant role in our financial lives, as they determine our creditworthiness and can impact our ability to get loans, credit cards, and even employment. Protecting your credit report is vital, and the good news is that there are several measures you can take to do so. In this article, we’ll go over how you can protect your credit reports, understand the difference between credit freezes and locks, and explore the main credit bureaus.
Free Credit Freeze Functionality
The first step in protecting your credit reports is to take advantage of the free credit freeze functionality that became available in 2018. A credit freeze, also known as a security freeze, restricts access to your credit report, making it difficult for anyone to open new accounts in your name. This is an excellent tool for preventing identity theft and can be especially useful if your personal information has been stolen.
To initiate a credit freeze, you need to contact each of the four major credit bureaus (Innovis, Experian, Equifax, and TransUnion) individually. There is no cost to place, lift, or remove a credit freeze, although you may incur fees if you place the freeze by phone. To lift a credit freeze, you will need to provide a personal identification number (PIN) or password that you received when you placed the freeze (normally emailed or post mailed to you after you request the freeze, per bureau).
Credit Freeze vs. Credit Lock
While credit freezes and locks may seem similar, they are not. A credit lock is a product offered by some credit bureaus and monitoring services that limits access to your credit report. However, unlike a credit freeze, credit locks are typically not free and come with a monthly fee. Additionally, credit locks may not be recognized by all lenders, which could limit their usefulness.
In contrast, a credit freeze is a legal right that you have under federal law and is recognized by all lenders. Additionally, credit freezes are free and can be initiated at any time. For these reasons, credit freezes are generally considered a better option for protecting your credit reports.
It is important to note that existing lenders (banks/companies you already have accounts with) are the only ones who can review your credit reports if they are frozen, but those are usually the companies that have your contact details and email or text you when someone performs activity on your account, so you can promptly sense that someone is abusing an account of yours.
Main Credit Bureaus
There are four main credit bureaus in the United States: Innovis, Experian, Equifax, and TransUnion. These bureaus collect information about your credit history, including information about your debts, payment history, and any other financial activities. This information is used to create your credit report, which lenders use to determine your creditworthiness.
It’s important to monitor your credit reports regularly, as errors can occur that could negatively impact your credit score. You are entitled to one free credit report from each of the major credit bureaus per year, so take advantage of this to check your reports regularly. If you find errors on your credit reports, it’s essential to dispute them promptly so that they can be corrected.
Other Consumer Reporting Agencies
In addition to the main credit bureaus, there are other consumer reporting agencies that collect information about you. For example, LexisNexis collects information about your insurance history, while ChexSystems collects information about your checking account history. It’s important to be aware of these other agencies and to check your reports with them as well.
Conclusion
In conclusion, protecting your credit reports from criminals is critical for maintaining your financial stability. By taking advantage of the free credit freeze functionality, monitoring your credit reports regularly, and being aware of the difference between credit freezes and locks, you can take steps to safeguard your credit reports and protect your financial future. Additionally, don’t forget to take advantage of your right to one free credit report from each of the major credit bureaus each year, and be sure to check your reports with other consumer reporting agencies as well.