Instant Credit Versus Defrosting Credit
Is it really necessary to be able to buy numerous high dollar items on a moment’s notice?
With new legislation before the Senate designed to protect Americans from identity theft, arguments between consumer advocacy groups versus creditors and lenders are numerous. One major point of contention is whether or not Americans should have the ability to freeze their credit or for lenders to continue to have instant access to it.
On this particular point, California’s legislation, which allows individuals to freeze their credit, appears to be the model that was used in the Senate proposal. In CA, individuals who decide to freeze their credit have to notify the credit bureaus, in advance, if they want it “thawed” in order for a lender to check it before issuing new credit. Credit institutions and lenders don’t want to be in a position that they have to wait 3 days to access someone’s records before granting new credit.
Why? It’s simple. If a person doesn’t have the ability to make a spontaneous decision to buy high dollar items on credit, then they might be more prudent in how they choose to spend their money. Retailers and lenders prefer, of course, for you to make that snap decision and go ahead and spend the money now.
Being able to freeze your credit can’t guarantee identity theft prevention but it can certainly reduce your risk of exposure. Being able to buy a big-screen TV on a moment’s notice with instant credit may seem convenient, but it’s not necessarily a benefit to you.
If people are allowed to freeze their credit and high dollar purchases are no longer spontaneous but planned for, I believe most people will end up in better financial condition. Having to think through and plan for such purchases may lead the way to helping people avoid large amounts of unsecured credit card debt.