Beating Broke

Personal Finance from the Broke Perspective

  • Home
  • About
  • Melissa Recommends
  • Contact
  • Privacy Policy

Powered by Genesis

How to Freeze Your Family’s Credit

September 5, 2022 By MelissaB 2 Comments

How to Freeze Your Family's Credit

About 15 years ago, I discovered someone had opened an account in my name and charged $1000. Luckily, I caught the fraud early, and the business where the theft occurred gave me my money back. However, that experience spooked me, so I froze my and my husband’s credit within days. At the time, parents could not freeze minor children’s credit, but that has since changed. Just recently, I started the process of freezing my younger children’s credit. If you’d like to do the same, here’s how to freeze your family’s credit.

The Drawbacks of Freezing Your Credit

My husband and I love that our credit is frozen because we feel less vulnerable to identity theft. However, there are a few drawbacks to this peace of mind.

You Must Thaw Your Credit in Advance If Applying for Credit

Recently, we bought a new house. The mortgage broker needed access to our credit scores and history, so I had to thaw our credit for all three credit bureaus. This takes me about 30 minutes each time I have to do this.

You Can’t Apply for Credit Spontaneously

Likewise, if you’re in a store and the clerk offers you a discount if you apply for the store’s credit, you won’t be able to because you have to thaw your credit first. But, again, I don’t consider this a drawback because it helps me avoid spontaneously signing up for credit, but some people feel boxed in by having frozen credit.

Limitations of Freezing Your Credit

While a credit freeze prevents thieves from opening new accounts in your name, it does not stop credit theft entirely. For example, within the last five years, my credit company has notified me three times that someone had fraudulently tried to charge something on my card. Luckily, each time the credit card company caught the theft and issued me a new card. However, in instances like this, my credit freeze did nothing to protect my existing lines of credit that I legitimately opened years ago.

How to Freeze Your Credit

Freezing your credit is simple. You can choose to call each credit bureau or complete an online form. Online is the easiest and fastest. You’ll need to give your name, address, and social security number. You’ll also need to answer some personally identifying information such as former addresses and counties you have lived in. This will allow you to set up an online account with each bureau so you can freeze and thaw your credit.

You can also choose to freeze your credit by mail, but this is the least efficient way and takes two to three weeks.

How to Thaw Your Credit

If you want to thaw your credit over the phone, you’ll need to use the PIN that the credit bureau gave you when you froze your credit.

If you want to thaw it online, log into your account with the credit bureau. A PIN is not required. Then you choose whether you want to temporarily or permanently remove your credit freeze. If you remove it temporarily, you can enter the date you want the thaw to begin and the date you want it to end.

Some credit bureaus used to charge a fee to thaw your credit, but, thankfully, now each of the three credit bureaus offers this service for free.

Why Should You Freeze Your Minor’s Credit?

Your child’s credit is a blank slate for a criminal. Because your child is too young to open credit, you will likely never check to see if their identity has been stolen. Unfortunately, this means criminals can open up a line of credit in your child’s name and have it for YEARS before your child first applies for credit or you check their credit for theft.

Furthermore, unscrupulous relatives can also steal your child’s identity. There have even been cases of parents using their child’s identity and opening lines of credit in the child’s name.

How to Freeze Your Minor’s Credit

How to Freeze Your Family's Credit

Freezing your minor’s credit is more complicated than freezing your credit.

You must freeze your credit at the three credit bureaus, just like adults do. However, to freeze your child’s credit, you must establish both your child’s identity and yours as the child’s parent. You will need to send copies of the following documents to the credit bureaus:

  • Your driver’s license (or other government-issued ID),
  • Your birth certificate,
  • Your child’s birth certificate,
  • Your social security card,
  • Your child’s social security card,
  • A utility bill with your name and address on it

In addition, you’ll need to complete and send in the Minor Freeze Request form from Equifax and Experian. Transunion requires you to complete the Child Identity Theft Inquiry and send in the necessary documentation.

If your child does not have a credit report (which is what you want since it means no one has opened credit in their name), the credit bureau will first need to open a file on your child. Then, the bureau freezes the child’s account. This process can take 10 to 15 days or longer before the freeze takes effect.

When Can a Minor Control Their Credit Freeze?

When minors are 16 or older, they can decide to leave their credit freeze in place, temporarily thaw it, or permanently remove it.

Final Thoughts

Freezing your family’s credit may seem over the top or paranoid, but it’s not. With our increasingly online data-driven culture, our personal information is on many online sites. As the news reminds us, these sites are regularly hacked allowing thieves to sell and use our personal information to their advantage. A credit freeze on each family member’s credit bureau file helps protect them from identity theft and the nightmare that comes from trying to prove you are not the one who ran up thousands of dollars on credit.

Read More

The Biggest Reason to Always Pay with a Credit Card

Help Your College Student by Adding Them as an Authorized User to Your Credit Card

Is It Worthwhile to Still Use Credit Cards with So Many Data Breaches?

MelissaB
MelissaB

Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.

www.momsplans.com/

Filed Under: Credit Score, General Finance Tagged With: credit, credit report, freeze credit, identity theft, thaw credit

Do Payday Loans Affect Your Credit?

August 9, 2021 By MelissaB Leave a Comment

Payday Loans' Effect on Credit

If you’re in a tight spot financially, payday loans can be attractive, especially if you have bad credit and have few other resources. A payday loan is usually for a small amount (less than $500), and you need to pay it back in two to four weeks. Even better for many is that payday loan companies don’t check your credit. Any individual is eligible for a payday loan. However, payday loans charge an exorbitant interest rate, and if you’re not able to pay the loan back in time, you can find yourself trapped in a negative payday loan cycle. This happens if you must continue to borrow money to pay what you already owe and what continues to grow because of the interest rates. When you get to this point, you may be concerned about payday loans’ effect on credit.

Payday Loans’ Effect on Credit

How payday loans affect your credit depends on whether you pay them off on time or if you default on them.

If You Pay Them On Time

If you pay your payday loans off on time, the loans have no effect on your credit. That means they won’t negatively affect your credit, but they also won’t do anything to improve your credit.

If you’re looking for methods to improve your credit, rather than payday loans, look to a secured debit card. Most people can qualify for a secured debit card even if they have bad credit.

If You Default on a Payday Loan

If you default on a payday loan, then your credit may be affected. Often, in this case, a payday lender will give your information to a debt collector. When this happens, the loan will appear on your credit report, and it will negatively affect your credit score.

Keep in mind, the payday loan will stay on your credit report for six years. Even if you work hard to improve your credit for three years after you defaulted on a payday loan, a bank may not want to lend you money for a car loan or a mortgage. If the lender sees payday loans on your credit report, those are red flags to the lender.

If You’re Taken to Court

Payday Loans' Effect on Credit
Some payday lenders may choose to take you to court if you default on payments. If you lose the case, once again, this appears on your credit report and will negatively affect your credit score for six years.

Final Thoughts

Before you take out this type of loan, be aware of payday loans’ effect on credit. A payday loan, even one that is paid on time, will not boost your credit score because the payday loan company doesn’t report it to the credit bureau. However, if you default or the payday lender must take you to court to get payment, then the payday loans can negatively affect your credit score for six years. If there is any other option to tide you over until the next payday, use that option rather than taking out a payday loan. For many borrowers, payday loans are traps that continue to spiral out of control months after you take out the original payday loan.

Read More

Options When Consolidating Payday Loans

How to Pay Down Your Credit Card Faster Even If You Don’t Have Extra Money

Help Your College Student by Adding Them as an Authorized User to Your Credit Card

MelissaB
MelissaB

Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.

www.momsplans.com/

Filed Under: Credit Score, loans Tagged With: Credit Score, payday loans

Your Credit Score Is Your Responsibility, Here’s How to Take Care of It

March 31, 2021 By Justin Weinger Leave a Comment

Your credit score is somewhat of a black box. It is difficult to know exactly how it is calculated, when it is calculated, who sees it, and what decisions they make as a result of it. No one consults you about your credit score. They don’t ask your opinion. They do nothing to seek clarifications. It is extremely one sided and you have no part in the process. That is about as unfair as it gets.

With so little input on the matter, it stands to reason that you have nothing to do with your credit score. But that isn’t true at all. You are ultimately the only person responsible for your credit score. You are the only one to fix it when it is broken. If it is telling a story about you that is misleading and defamatory, you are the one who has to do something about it. No one else is going to unilaterally intervene on your behalf if things are misreported. If you tried to sue a reporting agency for defamation, you would probably lose. Even so, it is still your responsibility. Here are a few things you can do to protect it:

Get the Right Loan at the Right Time for the Right Reasons

Which is worse? Is it getting a temporary loan to keep the lights on, or skipping out on all your creditors? To be clear, it is better to take out a loan to get you through the lean times. Look for one of those good credit union loans to help get you back on your feet. Bills don’t have to go into collection before they start weighing negatively against your credit. Late and slow payments will also leave a mark.

Everything about your financial situation gets worse as your credit score plummets. If your credit score drops too low, you will not be able to get a loan at all. Any loan you manage to get will be a bad one that will cause more problems than it solves. When your credit has suffered injury, you need to take proactive measures to stop the bleeding. One of those measures is to get the money to, quite literally, keep the lights on. You are going to borrow that money from someone, make sure it is a good source that helps you solve your financial woes rather than contribute to them.

Get Control of Your Spending

One of the sure-fire ways to go broke is to buy things you really can’t afford. This is a calculus that most people are pretty bad at making. How much house can you really afford? Can you make the monthly payment five years from now? What if you are laid off? Just how much house can you really afford?

In some ways, all purchases are emotional purchases. You can survive that with small items in moderation. But as the price tag goes up, the emotional temperature has to come down. It is a short step from wise purchase to foolishly setting your money on fire. You credit score suffers every time you misjudge the distance between the two.

Fight Back When They Get It Wrong

You are not totally helpless with regard to your credit score. You can fight back. Before you start fighting, be sure they actually have the wrong information. Keep an eye on your credit report. There are many services that will show you your report for free. You would be surprised at how many times the information is inaccurate. You can usually dispute those details for free right from your service of choice.

Come Clean with Your Creditors

Even if you really are drowning in debt, you can still throw yourself at the mercy of your creditors. They actually want to make a deal with you. The calculus is simple: They can get something if they make a deal or get nothing if they don’t. You can also make a payment arrangement that is surprisingly agreeable. Just address it head on and it will go better than if you ignore the problem. Ignored problems always get worse.

Your credit score is mostly a black box that cannot be deciphered. Once it starts going in the wrong direction, it is easy to feel helpless and defeated. Fight that feeling by getting a timely loan to stop the bleeding. Get control of your spending. Fight back when they get it wrong. And call your creditors before they start calling you.

Filed Under: Credit Score

  • 1
  • 2
  • 3
  • …
  • 9
  • Next Page »
  • Facebook
  • Pinterest
  • RSS
  • Twitter

Improve Your Credit Score

Money Blogs

  • Bible Money Matters
  • Celebrating Financial Freedom
  • Christian PF
  • Consumerism Commentary
  • Dual Income No Kids
  • Gajizmo.com
  • Lazy Man and Money
  • Make Money Your Way
  • Money Talks News
  • My Personal Finance Journey
  • Personal Profitability
  • Reach Financial Independence
  • So Over Debt
  • The Savvy Scot
  • Yakezie Group
  • Yes, I am Cheap

Categories

Disclaimer

Please note that Beating Broke has financial relationships with some of the merchants mentioned here. Beating Broke may be compensated if consumers choose to utilize the links located throughout the content on this site and generate sales for the said merchant.