Credit Advice

Who is notified when your credit file is frozen

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Credit Advice

Who is notified when your credit file is frozen

Dear Experian,

I have a credit freeze. If someone tries to establish credit without my pin code, what is the exact response they get from you? Do you tell them that they can not establish new credit because the account is frozen?

- HEV

Dear HEV,

Experian would not communicate in any way with an identity thief that used your information to submit a fraudulent credit application.

Instead, the lender to which he submitted the fraudulent application would get a notice saying Experian could not provide a credit report because the credit file is was frozen. Experian does not approve or decline applications, so would not tell the lender that new credit could not be established. That is the lender’s decision.

However, because the file is frozen, the application process likely could not be completed by the lender, so the identity thief would be unable to open a new account.

The lender may tell the identity thief that the application cannot proceed because the file is frozen. And, thinking the identity thief is you, may ask them to unfreeze the credit file, which is how the identity thief could learn the file is frozen.

Temporary security alerts and fraud victim statements work in a very similar way to stop identity thieves from opening fraudulent accounts. Lenders receive the statements with the credit report, alerting them that you may be or are a victim and directing them to verify the identity of the applicant and contact you before opening a new account.

The Fair and Accurate Credit Transactions Act (FACT Act) requires lenders to respond to those alerts. The result is that the transaction is halted until the identity of the applicant can be verified.

The system of alerts and file freezing provides several levels of protection. The temporary initial alert enables you to review your report to determine if credit fraud is being committed. If not, you may choose to allow the alert to expire because you are no longer at risk. An example is a laptop computer containing your sensitive personal information is lost but later recovered and none of the data was compromised.

Adding the temporary alert gives you some protection. When the computer is found you are no longer at risk and can allow the alert to expire without fear of being exposed to identity theft.

If you discover issues or learn that someone has stolen your identity you can take the next step, which is adding a fraud victim statement. To do so you must first file a valid identity theft report or police report. The victim statement is precisely that – a statement that you are a victim of identity theft. It remains on your credit report for seven years.

In most instances, I believe a victim statement will provide the protection a victim needs while still allowing access to credit they need. A victim statement will delay the application process while a lender verifies your identity but will not remove you completely from the credit marketplace.

The last step is freezing your credit file. Freezing your credit file removes you completely from the credit marketplace, which is an extreme step.

In order to apply for credit or other services that require a review of your credit history, you will first need to un-freeze your credit history. To do so you will need to make the request in advance and provide a PIN number provided by Experian.

In emergency situations or while traveling, you may not have your PIN available, which could cause significant problems for you. Many people do not realize that credit reports are used by cell phone companies to prevent fraud. Landlords and some employers also use credit reports to evaluate applications and to help prevent fraud, as well. So, they can be delayed in being able to get services if they haven’t prepared in advance by unfreezing their credit file.

Freezing your file will not prevent someone from stealing your identity information and using it for purposes other than applying for credit, and a frozen file can restrict or prevent access to credit or services when you need it, so I strongly encourage you to be very cautious about freezing your credit file. It is not the right thing to do for everyone, but can be the best option for some.

Fraud alerts and file freezing are free services for victims of identity theft. People who are not victims can freeze their credit histories for a fee.

Thanks for asking.

- The "Ask Experian" team

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