Can You Get A Credit Freeze In Canada?

Identity theft is a scary thing to think about. Thousands of Canadians fall victim to identity theft every year, and some have even lost their entire savings as a result. With emerging technology, hackers are getting better and better at accessing your personal data. Luckily, a credit freeze is a great preventative measure in stopping fraudsters from creating false credit accounts in your name. 

What Is A Credit Freeze?

A credit freeze, also known as a security freeze, is a freeze of access to your credit report and file. If a fraudster steals your information and decides to open a new credit account in your name, a credit freeze prohibits the credit bureau from sharing your credit information or personal data with anyone, which would likely deter a lender from lending to the fraudster. 

Credit freezes are especially important during data breaches. If a bank, financial service provider, or even the CRA experiences a data breach, you might be at risk for hackers and fraudulent activity. 

Unfortunately, however, credit freezes don’t stop fraudsters from accessing your existing credit accounts, or from conducting any other credit activities that don’t require a credit check. 

Can You Freeze Your Credit In Canada?

Unfortunately, you cannot freeze your credit report or file in Canada. Despite the 218% increase in fraud in Canada between early 2020 and early 2021, most Canadian provinces and territories haven’t introduced legislation for credit freezes. Credit freezes are more common in the United States. 

How Does A Credit Freeze Work?

The credit freeze process is quite simple – just follow these 4 steps:

1. You must contact each credit bureau to request a credit freeze in the United States. In your request, you’ll need to provide the following information:

• Name
• Address
• Date of Birth
• Social Security Number
• Other personal information as needed

2. To successfully place a credit freeze, you must reach out to all credit bureaus: Experian, Equifax, and TransUnion. 

3. After you set your credit freeze, the credit bureau will provide you with a personal identification number (PIN). This PIN lets you lift the credit freeze temporarily when you’re ready to apply for credit or delete the freeze permanently. 

Benefits Of Credit Freezes

A credit freeze is an easy process that offers many benefits:

Protects You From Fraud

A credit freeze makes it difficult for someone to fraudulently create a credit account in your name. When you, or an imposter pretending to be you, apply for a loan, lenders will often request credit information from credit bureaus. If you request a credit freeze beforehand, the credit bureau won’t share any information with the lender. Credit freezes make your credit report secure. And, without that important credit information, a lender will likely not lend or authorize a new credit account to a fraudulent individual. 

Free Of Charge

Credit freezes used to cost a fee; however, credit bureaus are now legally required to offer credit freezes free of charge. 

No Expiry

Once you successfully request a credit freeze, you can rest easy. Credit freezes don’t expire, so they remain in effect until you decide to lift them. 

Doesn’t Affect Your Credit Score

Credit freezes don’t hurt your credit score, or your ability to use your current credit accounts. 

Helps You Practice Restraint In Spending

A credit freeze might help you think twice before applying for a third, fourth, or fifth credit card. The time it takes you to lift the freeze (20 minutes) might give you time to reconsider an impulsive decision. 

Drawbacks Of Credit Freezes

Make sure you consider all the drawbacks of a credit freeze before taking action. 

No Guarantee

Credit freezes aren’t guaranteed to be 100% effective in preventing scammers from opening new credit accounts in your name. Additionally, credit freezes don’t help you protect credit accounts that are already in your name.  

Must Contact Each Credit Bureau

You must get in touch with each credit bureau to not only request a credit freeze but also to lift or delete the freeze. 

Requires Planning For The Future 

Credit freezes require planning. If you are thinking about opening a new credit account, such as a mortgage or credit card, you’ll have to plan for extra time in requesting a lift on the freeze. 

Additional Reading

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Other Ways To Protect Yourself From Fraud

If you’re a Canadian and want to protect yourself from fraud, there are other actions you can take. 

Sign Up For Fraud Alerts

You can sign up for fraud alerts with either TransUnion or Equifax. Equifax also offers an Identity Alert, which requires lenders to call you before offering credit after a credit check. Both bureaus allow you to request alerts via phone, online, or email. 

If a lender sees a fraud alert on a potential borrower’s credit file, they are legally obligated to take reasonable steps in verifying someone’s identity before lending them money.

Protect Your Personal Information

Don’t overshare personal information like your birth date, address, or family members’ names on social media. Additionally, safeguard your personal information, especially if you have acquaintances or strangers in your home. 

Begin Credit Monitoring

Credit monitoring is similar to a fraud alert. Credit monitoring notifies you if there are any changes to your credit reports. Although you can monitor your credit reports by manually examining them on your own, credit monitoring helps you remember, and encourages you to check when it really matters. This helps give you a push in checking your credit accounts for the alerted change, and helps you catch fraudulent activity early. 

Some changes you might be alerted of include:

• Hard credit inquiries
• New credit accounts in your name
• Changed name or address
• Public records, like bankruptcies
• Changed balances and payments to your credit products

Credit monitoring isn’t a fool-proof preventative measure to identify theft. Before applying for credit monitoring, remember its limitations:

• Information isn’t guaranteed to be safe from data breaches
• No alert for someone withdrawing money from bank accounts
• Doesn’t warn you of potentially fraudulent tax activity
• Doesn’t freeze your credit
• Doesn’t stop phishing emails

Review Your Transactions

Go through your credit card bills each month to find any unfamiliar transactions. Additionally, make sure you call your creditor immediately if you don’t receive your bill. This is often a sign of fraud, since fraudsters often try to change contact information to hide their activities.