Credit Freeze Vs Monitoring: Like Getting A Rolls Royce Instead of A ’76 Pinto for Identity Theft
George Boelcke FCI
October 24, 2007
A credit freeze is the ability to put a blocker, or freeze, on your three credit bureau files as the most powerful and effective way to stop identity theft from ever getting started. Millions of people are spending upwards of $100 or more a year for credit monitoring that essentially informs you, after the fact, that you have been a victim of identity theft.
The most common identity fraud involves crooks applying for credit under your name and frequently this starts at electronics stores. The crooks apply for instant credit and run up the new card (your new card) for stuff they can easily fence or re-sell such as computers, televisions and the likes. When fraud artists can’t even get started in applying for credit under your name, credit monitoring isn’t necessary, because these thieves can’t apply for any credit at all and are stopped dead in their tracks.
Credit freezes have been available in California for years, as well as 38 other states who have implemented enabling legislation. This powerful tool has now been extended to the other 11 states (Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia), making it possible for everyone to take this simple pre-emptive step to protecting themselves.
Car dealers, the credit bureaus and credit card companies were amongst the biggest groups spending a lot of time and energy lobbying against credit freezes. After all, a freeze now takes a couple of days to lift. Consequently, it rules out any impulse purchases made on credit. No more “just sign here,” because now you’ll actually have a built-in cooling off period. But then, for any large ticket items that require financing, looking and buying should NEVER be on the same day anyway. It’s a recipe for bad borrowing choices when you make instant decisions that will cost you for years and years.
This way, you’ll have the time to get a quote from your local credit union, compare that 2.9% car financing with the rebate alternative (no, the cool rate is NOT always your best deal). It’ll even give you a few days to decide whether that teaser credit card rate is really worth it, or whether you shouldn’t just focus on paying off your credit card, instead. Who knows, maybe you’ll take the time to read the tricks and traps hidden in the fine print of all these offers now, too?
Or, if you believe this would just be a hassle, it’s likely that you borrow money frequently and need to have ready access to your file by lots of lenders. But if you’re honest with yourself, doesn’t that speak volumes about your current financial and debt situation?
Who cares? About 10 million people each will be victims of identity theft. It’s the fasted growing area of white collar crime and the numbers are so staggering this is NOT an area to take the attitude of: “It won’t happen to me.” If it does, you’ll get the credit freeze for free – but you’ll also get an average of 500 to 600 hours of work and a couple of years to clean up the mess and that isn’t worth the risk!
What’s the cost? It’s $10 per credit bureau to set up the freeze. To unlock or “thaw” your credit file to let a lender you’ve authorized access your reports if you’re applying for a loan or credit card, it’ll be an additional $10 each. If you’ve been the victim of identity theft this service was, and continues to be, free of charge. The credit bureaus just need a copy of your police report or FTC affidavit to freeze and thaw your files at your discretion.
How do you set it up? You’ll need to send a letter with your name, address, social security number and signature along with a photocopy of your drivers’ license for identification, as well as the $10 fee. In return, you will have a unique security code number (from each of the three credit bureaus) that will allow you to identify yourself, and allow you to unfreeze each file at your discretion.
Yes, you do need to send your social security number and drivers license. After all, the credit bureaus have to know who you are. At least this time, they need to access the right file to freeze. If you’re concerned about identity theft in parting with this valuable information, just send it by certified mail or spend the five bucks for priority mail to get an actual delivery acknowledgement back.
Need more information? You’ll need to do this separately with each of the three credit bureaus (Experian starts the service November 1st, TransUnion is already rolling, and Equifax is taking the applications, but has not set an implementation date yet). Here are the actual links for each of the credit bureaus directly to the “how to” page of their site:
Equifax:
http://www.equifax.com/cs/Satellite/EFX_Content_C1/1165255679116/5-1/5-1_Layout.htm?packedargs=Locale%3Den_US
Experian:
http://www.experian.com/consumer/security_freeze.html
TransUnion: http://www.transunion.com/corporate/personal/fraudIdentityTheft/preventing/securityFreeze.page?#5
Who can still see my credit files? The block prevents any and all new credit inquiries. Creditors you currently owe money to can still update their files and have a look at your report. It’s called a soft inquiry and will continue to happen, so it won’t cause problems for your current lenders. After all, when you sign any credit application, you give that lender permission to review your credit file periodically.
One more thing: You need to remember that the vast majority of identify theft is from people you know! If that happens to you, your first call should be to the police and not to that person. Identity theft is exactly the same as if your friend or relative held a gun to your head and robbed you – because they did! You can deal with the “why,” “how” and possible restitution after you’ve contacted the police.
As of right now, only about 50,000 people have taken advantage of these credit freezes. Hopefully you’ll become one of them. In the words of that Nike slogan: JUST DO IT! Today…
The most common identity fraud involves crooks applying for credit under your name and frequently this starts at electronics stores. The crooks apply for instant credit and run up the new card (your new card) for stuff they can easily fence or re-sell such as computers, televisions and the likes. When fraud artists can’t even get started in applying for credit under your name, credit monitoring isn’t necessary, because these thieves can’t apply for any credit at all and are stopped dead in their tracks.
Credit freezes have been available in California for years, as well as 38 other states who have implemented enabling legislation. This powerful tool has now been extended to the other 11 states (Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia), making it possible for everyone to take this simple pre-emptive step to protecting themselves.
Car dealers, the credit bureaus and credit card companies were amongst the biggest groups spending a lot of time and energy lobbying against credit freezes. After all, a freeze now takes a couple of days to lift. Consequently, it rules out any impulse purchases made on credit. No more “just sign here,” because now you’ll actually have a built-in cooling off period. But then, for any large ticket items that require financing, looking and buying should NEVER be on the same day anyway. It’s a recipe for bad borrowing choices when you make instant decisions that will cost you for years and years.
This way, you’ll have the time to get a quote from your local credit union, compare that 2.9% car financing with the rebate alternative (no, the cool rate is NOT always your best deal). It’ll even give you a few days to decide whether that teaser credit card rate is really worth it, or whether you shouldn’t just focus on paying off your credit card, instead. Who knows, maybe you’ll take the time to read the tricks and traps hidden in the fine print of all these offers now, too?
Or, if you believe this would just be a hassle, it’s likely that you borrow money frequently and need to have ready access to your file by lots of lenders. But if you’re honest with yourself, doesn’t that speak volumes about your current financial and debt situation?
Who cares? About 10 million people each will be victims of identity theft. It’s the fasted growing area of white collar crime and the numbers are so staggering this is NOT an area to take the attitude of: “It won’t happen to me.” If it does, you’ll get the credit freeze for free – but you’ll also get an average of 500 to 600 hours of work and a couple of years to clean up the mess and that isn’t worth the risk!
What’s the cost? It’s $10 per credit bureau to set up the freeze. To unlock or “thaw” your credit file to let a lender you’ve authorized access your reports if you’re applying for a loan or credit card, it’ll be an additional $10 each. If you’ve been the victim of identity theft this service was, and continues to be, free of charge. The credit bureaus just need a copy of your police report or FTC affidavit to freeze and thaw your files at your discretion.
How do you set it up? You’ll need to send a letter with your name, address, social security number and signature along with a photocopy of your drivers’ license for identification, as well as the $10 fee. In return, you will have a unique security code number (from each of the three credit bureaus) that will allow you to identify yourself, and allow you to unfreeze each file at your discretion.
Yes, you do need to send your social security number and drivers license. After all, the credit bureaus have to know who you are. At least this time, they need to access the right file to freeze. If you’re concerned about identity theft in parting with this valuable information, just send it by certified mail or spend the five bucks for priority mail to get an actual delivery acknowledgement back.
Need more information? You’ll need to do this separately with each of the three credit bureaus (Experian starts the service November 1st, TransUnion is already rolling, and Equifax is taking the applications, but has not set an implementation date yet). Here are the actual links for each of the credit bureaus directly to the “how to” page of their site:
Equifax:
http://www.equifax.com/cs/Satellite/EFX_Content_C1/1165255679116/5-1/5-1_Layout.htm?packedargs=Locale%3Den_US
Experian:
http://www.experian.com/consumer/security_freeze.html
TransUnion: http://www.transunion.com/corporate/personal/fraudIdentityTheft/preventing/securityFreeze.page?#5
Who can still see my credit files? The block prevents any and all new credit inquiries. Creditors you currently owe money to can still update their files and have a look at your report. It’s called a soft inquiry and will continue to happen, so it won’t cause problems for your current lenders. After all, when you sign any credit application, you give that lender permission to review your credit file periodically.
One more thing: You need to remember that the vast majority of identify theft is from people you know! If that happens to you, your first call should be to the police and not to that person. Identity theft is exactly the same as if your friend or relative held a gun to your head and robbed you – because they did! You can deal with the “why,” “how” and possible restitution after you’ve contacted the police.
As of right now, only about 50,000 people have taken advantage of these credit freezes. Hopefully you’ll become one of them. In the words of that Nike slogan: JUST DO IT! Today…
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