Credit Freeze as Your Weapon Against Identity Theft
What is a Credit Freeze?
It's time to face facts. Your name, livelihood and credit can be easy prey for an identity thief. But that doesn't mean that you can't fight back using both credit and security freezes, measures specifically designed to help prevent identity theft. During the last five years, more than 27 million Americans have fallen victim to identity theft predators. While such alarming statistics are definitely cause for concern — and worse, they may also leave you feeling helpless against identity theft and credit fraud — the fact is that there are plenty of ways to stay proactive when it comes to your own identity theft protection.
What is a credit freeze?
A security freeze (credit freeze) gives consumers the choice to "freeze" or block access to their credit file against anyone who may be trying to open up a new account or to get new credit in their name. When a security freeze is in place at all three major credit bureaus, an identity thief cannot open a new account. As of October 2007, 39 U.S. states (plus Washington, D.C.) allowed consumers to place a freeze on their own credit file — which allows you to ban lenders and other businesses from viewing your credit report for up to seven years.1 However, since identity theft is among the fastest-growing crimes in America, it should come as no surprise that more states are considering credit freeze or "security freeze" legislation.
What steps do I have to take to initiate a credit freeze?
To place a credit or security freeze, you must write a letter requesting that the three main credit bureaus officially put a security freeze on your accounts. To make these requests "official," you must inform each bureau separately, via certified mail. The credit bureaus will charge a fee, usually between $10 and $15 (fees vary by state) to honor your request for a security freeze. However, if you can prove you're a victim of identity theft, then there is no fee. If you have become a victim of identity theft and you're requesting that the fee for the credit freeze be waived, you must include a copy of the police report that documents the identity theft.2
What's the difference between a credit freeze and a credit fraud alert?
A fraud alert is a message placed on a credit report by a credit bureau notifying you that there may be suspicious or fraudulent activity in your credit file. Fraud alerts, however, do not prevent an identity thief from hijacking your credit. By contrast, placing a credit freeze on your accounts will prevent lenders, mortgage brokers — anyone — from looking at your credit. And that's the fundamental difference: When you implement a credit freeze, identity thieves cannot open new credit accounts or apply for personal loans in your name. One other important thing to remember, though, is that credit freezes DO NOT prevent thieves from using an existing credit card number that has been stolen.
If lenders can't view my credit, how will I ultimately get the credit I need?
You can lift a credit freeze anytime you want — especially when you are pursuing a loan of some type. The downside is that it will take a few days (at least three business days2) for the ban to lift, which may result in the loss of a lower mortgage rate or a special credit card promotion.
It's also important to remember that even if you do initiate a credit freeze, you can still get a copy of your personal credit report. Also remember that a credit or security freeze will not lower your credit score. Consumer reporting agencies, lenders, banks and the like cannot state or imply that a credit freeze automatically reflects a questionable credit history.2
If I don't initiate a credit freeze or fraud alert, what else will protect my credit?
Other than periodically checking your credit (many experts say that it's a good idea to check your credit on a monthly basis), you can get a protective feature called credit report monitoring to help safeguard your credit. Credit report monitoring, for example, is available from PrivacyMatters.com. While the service does not correct credit problems or discrepancies, it does alert you to any changes in your credit report. Much like your decision to initiate a credit freeze, credit monitoring allows you to be proactive when it comes to your overall credit.