No one will argue that cyber criminals have been working overtime to get our personal information. With Equifax and other companies reporting massive data breaches this year, more consumers are putting a freeze on their credit reports. And while a credit freeze won’t affect a borrower’s ability to qualify for a mortgage, it does require the borrower to take additional steps during the application process.
A credit freeze blocks anyone—including lenders—from accessing your credit report. Requests for a credit freeze must be submitted by mail, online or over the phone to the three major credit bureaus individually (Equifax, TransUnion and Experian).
Once placed, a credit freeze stays on your credit report until you lift or remove it. But remember in order to lift a credit freeze, you need to contact all three credit bureaus individually, just as you did to establish the freeze.
For borrowers applying for a mortgage, a freeze will need to be lifted once when making initial mortgage application, and once again at the end of the underwriting process, as most lenders pull credit again just before closing. If you are concerned about timelines, be sure to work closely with your lender on when credit will be pulled to ensure that you contact the bureaus in plenty of time for the freeze to be lifted.
It’s possible for borrowers to run into problems in a competitive situation where they need to close quickly. In those instances, it might be tricky to unfreeze the credit in time for the lender to pull credit reports and complete the underwriting and pre-closing process.
Here are a few considerations if you’re applying for a mortgage with frozen credit.
• While freezing your credit protects you from the time the freeze becomes effective, it does nothing to correct existing credit issues. Get a copy of your credit report from each of the three reporting agencies, check them carefully and correct any errors before you apply for a mortgage.
• While a credit freeze “locks down” your credit, a fraud alert still allows creditors to pull your credit report as long as they verify your identity first, according to the Federal Trade Commission. For example, a business may call you to verify that you are the person requesting new credit. However, while fraud alerts may make it more difficult for others to open new credit accounts in your name, they may not prevent misuse of your existing accounts. Placing a fraud alert is easier than with a freeze. You need only to contact one of the reporting agencies, which in turn is required to notify the others. A fraud alert is free.
• Understand the logistics of lifting the freeze—and make sure you allow enough time for the lender to pull credit reports. Consumers who deal directly with the three credit-reporting agencies are given a personal identification number to provide, either by phone, online or mail, every time they want to lift or remove the freeze. Alternatively, consumers can lock or unlock their credit using a third-party service like TransUnion’s TrueIdentity, which is available online or in an app.
For addition information and details about freezing your credit, fraud, and identity theft issues contact the three credit bureaus.
Equifax: 888-349-9960, www.equifax.com
Experian: 888-397-3742, www.experian.com
TransUnion: 888-909-8872 www.transunion.com
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