Credit Freeze - Your Solution to ID Theft

When you request financing or credit for anything, the lender will always run a credit check to investigate your credit worthiness and figure out what rate to charge you. The credit freeze makes your credit report unreadable to the lender and they won’t lend “you” (the thief) money if they can’t read your report. The current system in place is a fraud alert on your report that a lender can choose to ignore or not even receive (if they get a partial report), the law doesn’t even require that a lender even read that report. So why aren’t more people using the freeze? It’s not available everywhere and sometimes only to people who’ve been victimized before.

The freeze is free if you’ve been the victim of identity theft. It costs a little bit to freeze (Equifax $12, Experian $60/yr, and TransUnion $30) and a little less to unfreeze (Equifax $8, Experian: free, TransUnion $15). Remember, if you decide to freeze you must do so with all three agencies because freezing one won’t freeze the others and you never know which agency will be contacted for your report. (those costs are for California residents but probably extend everywhere freezes are available)

Currently, these states offer security/credit freezes for all consumers: California, Colorado, Connecticut, Louisiana, Maine, and Nevada. These states offer it for identity theft victims: Illinois, Texas, Vermont, and Washington. Finally, New Jersey has a bill they simply need to get to and these states are currently considering a freeze bill (or updating their current one): AK, CA, DE, HI, IN, KS, KY, MD, MA, MI, MN, MO, NJ, NM, NC, NV, NY, OR, PA, TX, SC, UT. If nothing else, the latest round of identity theft “panic now” articles on the news should force the hands of the legislatures. (Credit to PIRG.org for this great list)

Another downside is that this only prevents the further extension of credit. If you have accounts compromised or credit cards lost/stolen, it obviously wouldn’t protect you there. However, having this nationwide for everyone is something that should be pushed heavily.

Bankrate has a great article with instructions for California residents for each of the agencies. There’s some more information about the California Law and about credit freezes in general at FightIdentityTheft.com.