Saturday, December 22, 2007

Credit Freeze: A New Weapon for Putting the "Freeze" on ID Theft

Nancy Osborne, COO of ERATE

On November 1, 2007 your tool box for fighting identity theft got a little bigger, freezing your credit may be the best possible defense in protecting yourself against ID theft. A credit freeze involves blocking (or locking out) potential credit and ID thieves from gaining access to your credit information, including both your personal credit history and credit scores. By initiating a credit freeze you are requesting that the credit bureaus stop sharing information on your report without your express permission. This will effectively make it impossible for anyone to hijack your credit by applying for a loan in your name. Freezing your credit does require some effort on your part however it may be far less of a hassle than correcting the damage done by an ID thief or having to continually employ a credit monitoring service. In order to put the freeze on your credit into effect you are required to request it in writing by certified letter and to send it to all three bureaus, in addition proof of your ID will be needed.

There are 39 states which have laws allowing for the freezing of credit and of the 11 remaining states which do not, you may still freeze your credit but the bureaus may require a fee from you to do so. The fee requested by each of the bureaus is generally about $10 to initiate the freezing and $10 to temporarily unfreeze it or to remove the freeze permanently so $30 total ($10 x 3 bureaus). If you have had the misfortune of being a victim of ID theft already, then the freezing service should be available to you at no charge. It is important to note that by freezing your credit profile from ID thieves you may also be freezing out yourself or at least creating some obstacles in getting access to your own credit when you need it. A freeze effectively locks out everyone (including you) and in order to remove the freeze you will need to contact each of the bureaus to have them take your credit out of deep freeze while you are going through a credit application process or applying for a loan, this will take time and will likely cost you $30. However you will only be required to go through the unfreezing process if you are working with a new creditor as those creditors you already work with or have an authorized relationship with will continue to have access to your credit information.

For those consumers who do not anticipate the need to work with new creditors in the foreseeable future or believe they will not need to call upon their credit at all, this could be an extremely beneficial precaution to take. Even after considering the cost of freezing and unfreezing a credit profile with all three bureaus, this may end up being more cost effective in the long run than using a credit monitoring service. However if you don't want to spend the time or bear the expense involved that freezing your credit would require, you can still implement some credit protection for yourself by placing a 90 day fraud alert on your credit report with each of the three bureaus. An alert is not as much of a safeguard as freezing your credit but it does provide an added layer of protection in that the bureaus are required to take additional measures in verifying the accuracy of anyone applying for credit in your name. Key to using the credit alert vs. a credit freeze is that with the alert you must re-apply for it every 90 days in order to maintain it or risk it expiring on you.

Please contact the 3 credit bureaus for more information on freezing your credit:

Experian Security Freeze
P.O. Box 9554
Allen, TX 75013

Equifax Security Freeze
P.O. Box 105788
Atlanta, GA 30348

TransUnion Security Freeze
P.O. Box 6790
Fullerton, CA 92834

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