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 One of the ways to combat identity theft is to freeze your credit report. It's effective in preventing a thief from opening an account or new line of credit in your name. But credit freezes don't deter all instances of identity theft.
In this article, we're going to explain how credit report freezes can be used to help prevent identity theft. We're also going to explain how to go about putting a freeze on your credit report. Finally, we're going to talk a little bit about the types of identity theft that credit freezes don't prevent.
Freezing a Credit Report
Going through the process of freezing your credit report is a very effective way of preventing someone from stealing your identity and / or taking out a loan in your name. It's also effective in stopping someone from applying for a credit card, opening up a bank account, or even signing up for cell phone service in your name.
What is a Credit Freeze?
In many states, consumers are permitted to place a "freeze" on their credit - which restricts access to their credit report. By placing this freeze on the access to the report, the probability that an identity thief is able to open a new account in your name is greatly diminished.
A credit freeze does not affect credit scores, and consumers cannot be denied access to their free annual credit report if their report is frozen. It also has no affect on your ability to purchase your credit score.
Unfortunately, the laws governing credit freezes vary from state to state. For example, some states only allow identity theft victims to freeze their reports. Most states allow identity theft victims to freeze reports without paying a fee, while allowing non-victims to freeze reports for a fee.
Fees Charged for Freezing a Credit Report
Fees for freezing a report can range from free for identity theft victims to around $10. This fee is charged by each of the three credit reporting agencies, so a consumer can expect to pay around $30 to freeze all their reports. Married couples will pay up to $60.
When applying for new credit, the freeze can be temporarily lifted. Again, fees will vary by state, but the temporary or the permanent removal of a credit freeze typically costs $5 to $10 per report.
Finally, some states allow the credit freeze to expire after seven years, while in other states the freeze remains until a removal requested is made by the consumer.
Placing a Freeze on a Credit Report
In order to place a freeze on a credit report, you must contact all three credit-reporting agencies - Equifax, Experian and TransUnion. The most effective way to contact an agency is via a written letter. If you're a victim of identity theft, and you want to avoid paying fees, then you must send a copy of a police report or a report filed with a law enforcement agency to the credit bureau.
Along with your payment, the information typically required when seeking a credit freeze includes:
- Your full name, middle initial as well as any suffix (Jr., Sr., III), address, Social Security Number and date of birth.
- The street addresses of all your former residences over the past five years.
- Proof that you're living at your current address such as a recent utility bill that includes both your name and address.
- A copy of a government-issued identification card such as your driver's license or military identification needs to accompany the letter too.
Written correspondence should be mailed to the following addresses:
Equifax Security Freeze
P.O. Box 105788
Atlanta, GA 30348
Experian Security Freeze
P.O. Box 9554
Allen, TX 75013
Trans Union Security Freeze
P.O. Box 6790
Fullerton, CA 92834-6790
The exact credit freeze rules that apply to each state can be found here.
Credit Freeze Timelines
The credit-reporting agency has three business days after receiving your request to place a freeze on your report. After five business days, the agency must send you a confirmation letter along with a personal identification number, or PIN.
You cannot use your Social Security Number, or any portion of it, to create a password to either be used to temporarily, or permanently, remove a freeze - that's the purpose of the PIN. As of September 1, 2009, all credit reporting agencies must lift a freeze within 15 minutes after receiving a request.
Temporarily Lifting a Freeze
Since the purpose of a credit freeze is to prevent identity thieves from opening new lines of credit in your name, you will have to lift the freeze whenever applying for credit. You can permanently, or temporarily, lift a freeze by contacting the credit-reporting agency and providing them with the PIN you've received.
Since agencies are now required to lift the freeze in 15 minutes or less, access to new lines of credit will occur relatively quickly. As mentioned, most states allow agencies to charge fees whenever lifting the freeze or freezing a report.
The companies that you're doing business with today will still have access to your credit report. This includes your mortgage, cell phone, and / or credit card companies. In addition, debt collection agencies working on behalf of those companies also have access to your report. You do not have to lift a freeze to allow these companies to view your report.
Limitations of Credit Freezes
By now, you should understand that a credit freeze prevents unauthorized access to your credit report, thereby limiting the potential for a stranger to obtain new credit or a loan in your name. Unfortunately, it's not able to stop all forms of identity theft. For example, a credit freeze has no impact on the theft of the following account types:
- Existing credit cards or debit card accounts
- Existing bank accounts
- Certain new accounts such as telephone service and even some bank accounts that can be opened without running a credit check.
That being said, credit freezes are considered effective in stopping a thief from opening the majority of new account types.
About the Author - Freezing Credit Reports
Copyright © 2008 Money-Zine.com
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