Thousands of Canadians fall victim to identity theft every year, and as a result, some have even lost their entire savings. 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. Find out if you can place a credit freeze in Canada.
What Is A Credit Freeze In Canada?
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 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 Place A Credit Freeze In Canada?
Yes, you can place a credit freeze in Canada, however, you can only do so in one province: Quebec. 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.
How To Place A Credit Freeze In Quebec
Thanks to the Credit Assessment Agents Act (Bill 53), as of February 1, 2023 credit freezes in Quebec are available. Quebecers will be able to place a credit freeze (aka credit lock) for free with both credit bureaus, TransUnion and Equifax.
To place a credit freeze, a consumer must get in contact with both Equifax and TransUnion individually. The good news is that both companies will allow Quebec residents to place, suspend, or remove a credit freeze online. This means it will be easy for most consumers to take advantage of this service. But you can also call each credit bureau if you prefer to do it over the phone.
According to Equifax, there will be a new designator code for credit locks: 7.
How To Remove A Credit Freeze?
- TransUnion – To remove a credit freeze through TransUnion, you can do so online by visiting ocs.transunion.ca. You can also request the removal of a credit freeze on your credit report by contacting Transunion by phone or mail.
- Equifax – You can remove a credit freeze by accessing your online account or by going to a walk-in centre. You can also call Equifax or mail them to request the removal of your credit freeze.
Benefits Of A Credit Freeze In Canada
A credit freeze is an easy process that offers many benefits:
A Credit Freeze Protects You From Fraud
A credit freeze makes it difficult for someone to fraudulently create a credit account in your name. For example, if an imposter pretending to be you applies for a loan, the lender will not be able to access your credit information when they try to conduct a credit check. And, without that important credit information, a lender will likely not lend or authorize a new credit account to that fraudulent individual.
Free Of Charge
While a credit freeze is not available across Canada, it is available and free in Quebec. In order to comply with the Credit Assessment Agents Act, both credit bureaus in Canada are now legally required to offer credit freezes to Quebecers free of charge.
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 Scores
Credit freezes don’t hurt your credit scores, or your ability to use your current credit accounts. In fact, a credit freeze may help protect your credit scores as it helps stop individuals from opening and using any credit accounts under your name.
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 might give you time to reconsider an impulsive decision.
Drawbacks Of A Credit Freeze In Canada
Make sure you consider all the drawbacks of a credit freeze before taking action.
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 open 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.
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.
Credit Freeze In Canada FAQs
Do credit card freezes protect you from fraud?
How much do credit card freezes cost?
Does Canada plan to introduce legislation for credit freezes in the near future?
Will a credit freeze affect my credit score?
While credit freezes are only available to Canadians living in Quebec, there are still a number of alternatives to protect yourself from identity theft. From fraud alerts to generally monitoring your credit report, they can help protect your credit from identity theft.