Although it takes a little effort; and a little cash, to place a credit freeze through a credit report bureau, it takes a vastly more effort and a lot more money to clear your name if you become the victim of identity theft.
Identity theft victims can suffer the affects for years. To prevent your identity from being stolen, you might consider a credit freeze on your credit report.
How the credit freeze helps protect against identity theft: - By inhibiting the application/credit report review process, the credit freeze makes it difficult for identity thieves to get credit in your name. You can freeze your credit report at all three major credit bureaus.
When you place a credit freeze on your credit report, creditors and lenders (including credit card issuers, auto, home, payday and personal loan providers) can't check your credit report and score unless you've provided the credit bureau a password. Without that security information, creditors and lenders can't check your credit report and score. Since most creditors and lenders first require a credit check of your credit report before approving a credit application, since that step was denied by you via the credit freeze, the application will likely be denied. Hence, the identity thief gets thwarted.
As you can see, credit report freezing isn't a 100% guarantee against identity theft. If the identity thief applies for credit with a creditor or lender who doesn't require a credit report check prior to issuing credit, the identity thief will be able to open an account in your name. Also, be aware that not all types of identity theft involve opening new accounts with your identity. Some types of theft, like credit card shaving (see below), involve existing credit cards and accounts.
Will the credit freeze affect creditors you already have? No. Your existing creditors (card issuers and loan lenders) can still access your credit report and score without your password. Certain law enforcement agencies and other government entities can also access your credit report and score.
Will a credit freeze lower your credit score? No. The freeze doesn't affect your credit score.
Who should freeze their credit report? If you have any of the following, you might want to consider a credit freeze:
You've been a victim of identity theft
Your credit card number has been stolen
Your mail has been tampered with or stolen
You're subscribed to a credit monitoring service
You want to protect yourself from identity theft
You're going through separation/divorce and your spouse is opening new lines of credit which you would be jointly responsible for
Most states have laws requiring credit reporting agencies to allow consumers to place security freezes on their credit reports. Nine states; however, do not have such a law but the credit report agencies still voluntarily offer a credit freeze. Those nine states are:
Alabama
Alaska
Georgia
Iowa
Michigan
Missouri
Ohio
Virginia
In most states, the credit freeze remains in effect until removed by the consumer. However, some states automatically expire the credit freeze after seven years.
Fees range from $5 to $20 to freeze, temporarily lift the freeze, remove the freeze, or to replace your PIN. But, if you've been a victim of identity theft there is no fee to freeze your credit report. Some states also waive the fees for seniors over a certain age. You must contact each credit bureau separately to freeze your credit report at that bureau.
What is Credit Card Shaving? A thief; or a scam artist, randomly tries 16 digit credit card numbers until he finds one that works. Then he shaves the numbers from a prepaid credit card he has, and replaces the 16 digit number your number. Next, the thief scratches the magnetic strip on the back of the credit card to destroy it, thus forcing store clerks to manually key in the credit card number on the front of the card. Even though you still have possession of your credit card, the thief is using your number and fooling store clerks.
How to avoid Credit Card Shaving: Since the theft involves a scam artist successfully guessing your credit card number, there's not much you can do to keep your credit card number safe. Hence, early detection is key with this type of theft. Monitor your credit card statements closely. Checking your account more frequently than once a month will aid in early detection. Order copies of your credit report at least once a year. You are also entitled to an annual free credit report.
What to do if you're a victim of identity theft fraud? Immediately notify your creditor about fraudulent transactions to prevent future charges and file a police report. Many credit card companies require a police report before they will remove fraudulent charges from your account.
Check your credit report to make sure the account is correctly reported and that no other accounts have been compromised. As a victim of identity theft, you're entitled to a free credit report (in addition to the one provided under the Fair and Accurate Credit Transactions Act).
