November 2nd, 2017 7:02 AM by Jackie A. Graves, President
Baby, it’s cold outside.
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
and employers—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). You’ll need to provide
your name, address, date of birth and Social Security number. The fees vary by
state but run from free to $10 each time you place or lift the freeze, and
payments can be made using a personal check, money order or credit card. (Fees
may be waived for victims of identity theft.)
Once placed, a credit freeze stays on your credit report until you lift or remove it. But remember: It can
affect your ability to get a new cellphone, apply for a store credit card or
even get a job. And existing creditors or debt collectors acting on their
behalf will still have access.
your credit can prevent others from opening new lines of credit in your name,
but it also prevents you from opening an account yourself,” says Sam Mischner,
chief sales officer and head of mortgage at Charlotte, N.C.-based LendingTree.
“If you’ve instituted a freeze on your credit but now want to apply for a loan,
you will need to take the extra step of allowing the lender access to your
credit. You will have to contact each credit bureau to temporarily lift the
borrowers applying for a mortgage, that freeze will probably only have to be
lifted once, because the credit report would be good for the typical 30- to
45-day period from contract to closing, says Josh Moffitt, founder and
president of Silverton Mortgage Specialists, a direct-mortgage lender in
Atlanta. But there are certain situations where another report needs to be
pulled by the lender nearer to the closing. In that case, the borrower may have
to lift the freeze—and pay for it—multiple times.
addition, borrowers might run into problems in competitive housing markets
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.
are a few considerations if you’re applying for a mortgage with frozen credit.
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.
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
Know how the freeze works
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, according to David M. Blumberg, a spokesman for TransUnion.
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.
contact information for fraud and identity-theft issues.
For more smart financial news and advice, head
over to MarketWatch.
Robyn A. Friedman – To view the original article click here