A credit freeze is designed to protect you and your credit information from being accessed by a third party, be it a creditor or fraudulent thieves. But a credit freeze may not be in your favor if you're trying to get a mortgage, so you must understand how it would work before putting one on your account. In this blog post, we will define what a credit freeze means and discuss its possible effects on your mortgage, as well as what you can do to get it removed.
What Is a Credit Freeze
A credit freeze allows a consumer to control and restrict access to their credit report. This makes it more difficult for thieves, scammers, and other unauthorized parties to open credit in that consumer's name without their permission.
Although credit freezes are a helpful tool to protect your personal information, they should not be considered the protection solution. Freezing one's credit does not prevent a thief from accessing accounts that have already been opened and stealing money before the owner is aware. For this reason, all consumers need to work quickly at keeping their account details safe and monitoring their account activity closely.
How Does A Credit Freeze Impact Your Mortgage
Freezing your credit does not mean you cannot use credit; you still make loan and credit card payments as usual, and creditors continue to report your activity to credit bureaus. So, Your credit score can and will change because it is calculated from the data accumulating in your credit file.
While it may not impact your credit score, it will, however, prevent anyone from accessing your credit records. This means that a mortgage lender will not be able to pull your credit to see if you are eligible for more favorable terms based on your past history of repayments and other factors, which is a necessary step to get you cleared and pre-approved for a mortgage.
How To Remove A Credit Freeze From Your Account
To remove a credit freeze from your account, you will have to contact each of the three credit reporting agencies. You can have it removed from one and then move on to the next, but you will need to verify your identity with them by providing a copy of your ID for verification purposes and signing an affidavit that states they are granting permission to temporarily remove the freeze due to mortgage or refinance application status.
A credit freeze is a good way to protect yourself from identity theft. If you've been considering purchasing a home or refinancing your current loan, you may not be able to proceed with a credit freeze in place. Interested in finding out more about how to protect your information throughout the mortgage? Contact us today!