Credit monitoring or credit freeze: Which one to consider for credit protection

Your credit score is a big part of whether or not you can get any credit, like a personal loan, a mortgage, or a credit card. A higher credit score helps to save money by lowering your interest rate on these products. That’s why it’s crucial to keep fraud and other outside influences from hurting your credit score. It’s easier to get a good score than worry about someone else lowering it and making it harder to manage your money. Freezing your credit and using a service to keep an eye on it are two good ways to keep your credit safe.

Knowing how these protections work and what they can’t do can help keep your credit in good shape.

What is credit monitoring? And how does it work for you?

Credit monitoring is a service that provides real-time notifications about changes and activity on your credit report. This can include new accounts opened in your name, changes to your existing accounts, and other activities that can affect your credit score. Credit monitoring can help you quickly address any issues and prevent potential damage to your credit by alerting you to fraud or errors.

However, it is essential to note that credit monitoring does not guarantee complete protection against identity theft or fraud, as these alerts may come after the damage has already been done. It is still a good practice to regularly review your credit reports, monitor your bank and credit card statements, and be vigilant about protecting your personal information.

Credit monitoring is a service you can sign up for that will let you know when there is any suspicious activity on your credit report. It also applies to a hard inquiry, a new account opening, and making changes to an existing address.

Some credit monitoring services may also offer extra protections, like scanning the dark web or insurance against identity theft.

Free credit monitoring services can do the job, but they are often tied to a particular bank and only sometimes check all three major credit bureaus.

How does freezing your credit help you?

With a credit freeze, banks, utility companies, and others can’t look at your credit report.

A credit freeze makes it impossible for you or anyone else to open an account in your name because many accounts need a credit check.

So, putting a freeze on your credit is an excellent way to stop fraud and keep yourself safe from the effects of data breaches and identity theft.

It is now legal to freeze your credit with Experian, Equifax, and TransUnion and take it off.

But you must set up your freeze and handle it with each agency separately.

Your credit report can be frozen or unfrozen quickly online or by phone.

How can you place a security freeze on your credit report?

The major credit bureaus (Experian, Equifax, and TransUnion) can usually freeze your credit reports after you request them. You’ll need to apply for a security freeze and pay a fee of $10 to each credit bureau. However, you may be exempted from paying the costs if you are above 65 years of age or may have been a victim of identity theft.

The credit reporting agencies are supposed to place the freeze on your report within five days of your application. The agencies will then forward a confirmation letter to you with a unique Personal Identification Number (PIN). This PIN will act as a password for you if you want to allow access to any specific creditor later on or want a temporary lift of the security freeze. Any other potential creditor will receive a message that the file is frozen if they try to check your credit reports. However, you can still order your credit reports for yourself after you place the freeze on them.

Can a security freeze repair your credit?

A security or credit freeze will only prevent future credit checks and frauds. It will only be able to help you in any way if you are planning to repair your credit. The payment history and other ongoing credit activities remain unaffected while you freeze your credit report.

This means that your present creditors or lenders, insurers, and the bank will be able to check your credit report in the usual way. However, since multiple credit checks negatively impact your credit score, a freeze will be able to prevent any further damage to your credit report.

Factors to be considered before you opt for a credit freeze

A credit freeze may be a favorable security option for you. Nevertheless, certain factors should be considered when you go for a security freeze on your credit report.

• It is not free – A credit freeze will make you pay charges for the security it provides unless you are above 65 years or have been subjected to identity theft. It will be pointless to freeze only one of the credit reports since the creditors can also inquire into the other two credit reports. So, to make a security freeze effective, you’ll have to freeze all three of them, which will cost you $30. Again, for temporary suspension of the freeze on your reports, you’ll have to pay extra charges each time you apply for a new line of credit.
• It is exhausting – Your credit report records each of your financial transactions. As such, each time you decide to change your lenders or take out a new loan, make a new investment, buy a new insurance policy, or try to get a utility service, house, or even a job, you’ll have to suspend the freeze on your credit report temporarily. The whole process is extremely tiring and costs you as well.

Credit freezing vs. credit monitoring: Which is good for you?

Freezing your credit or signing up for a credit monitoring service accomplishes different things, and you don’t have to choose between the two.

Credit monitoring makes it easy to keep your credit history free of mistakes and helps you find suspicious activity on your credit report quickly. But it will not lock your credit file or stop people from opening accounts in your name.

You must apply a freeze at each credit bureau individually; freezing your credit reports is more time-consuming than setting up a credit monitoring service.

You’ll also need to unfreeze each credit report individually. However, you are protected from having accounts opened in your name fraudulently, which credit monitoring services cannot provide.

With a credit monitoring service, you can keep track of your credit reports and help keep them error-free. And if your subscription includes identity theft insurance, you’ll be covered in the worst-case scenario.

Conclusion

Your credit score will not go down if you freeze your credit or use a service to keep an eye on it.

Both tools have no direct effect on your credit score, based on how well you pay your bills, how old your accounts are, how much credit you use, and other things.

Your credit score can increase if you freeze your credit or sign up for a credit monitoring service.

When you lock your credit report, the number of hard inquiries on your account decreases. Each hard inquiry has less of an effect on your credit score than the last.

A credit monitoring service will also help you find mistakes on your credit report that could hurt your score and quickly dispute them.

So, if you’re considering putting a security freeze on your credit report, think about how you’ll handle your money in the future.