The Problem
What this means is that identity crimes that involve a credit check (which is most of them) can be curbed or eliminated by controlling how credit reporting companies give out your data.
Credit File Controls
There are three kinds of credit controls which are as follows:
- Fraud Alert – This is a checkbox that, if checked, tells a retailer to be more careful when granting credit to the person who's account they're looking at. It is optional and not enforced in any way. Chances are that less reputable retailers or ones who are highly motivated to get "the sale" aren't going to be as worried about whether or not the person in front of them is legit or not.
- Credit Monitoring – The short version is that you pay the credit reporting company to let you know when changes are made to you account. That way, if anything changes when you didn't expect it, you might be able to tell that ID theft is happening sooner. I am against this and in fact believe that credit monitoring is a huge ripoff.
- Credit Freezes – The third and final option that businesses and especially the credit reporting industry has fought long and hard against. This tool makes ID theft practically a thing of the past (explained in detail below).
How to Stop ID Theft Cold – Credit Freezes
A credit freeze locks your account under a PIN or password that only you know. This way, even if a thief has ALL of your personal data, they still can't do anything in your name that requires a credit check (loans, accounts, utilities, property etc). The only reason they could before is that every piece of information needed for a credit check is public or easily attained information (SSN, birth date, name, etc.).
Not only will this prevent (almost) anyone from accessing your credit without your prior permission, because thawing the account is currently not an instant process, it will help reduce the amount of impulse spending and new credit that has been getting people into so much trouble.
How to Freeze and Thaw Your Account
The amount of time and ease it takes to freeze and thaw your credit files will vary by state. States with good laws force the companies to make it fast, easy, and cheap, but not all states do. Many states don't have freeze laws, but the credit reporting companies allow freezes anyway (on their worse and more expensive terms of course).
For a while, I expect that the credit companies want to make it as hard as possible to discourage the use of freezes. After a significant portion of people freeze their accounts, businesses and credit reporting companies will find it to be in their best interests to make the process much faster and easier to try and reclaim their lost revenue to people who get suckered by insta-credit.
Freezing Your Account
To date, almost 40 states have already passed credit freeze laws. As of Feb 2009, these are the links to each Credit Reporting Company for credit freezes:
http://www.experian.com/consumer/security_freeze.html
http://www.transunion.com/corporate/personal/fraudIdentityTheft/preventing/securityFreeze.page
www.freeze.equifax.com
Note that in the fall of 2007, all three credit reporting companies announced that they'd offer credit freeze protection to anyone in any state. That means for the states that haven't gotten around to handling ID theft with freezes, consumers will still be able to freeze their accounts. My guess is that the companies figured it was only a matter of time so they'd better offer programs on worse terms than the states generally enforce before the hold-outs passed laws too.
To date, Transunion is the easiest to deal with and Equifax is the hardest (by far). I've already issued a complaint with the state about this under the assumption that Equifax is either purposefully blocking our rights to use freezes or is just plain negligent. Either way, hopefully they fix up the issue soon.
Thawing Your Account
Depending on the state, it will cost you from $0 to $10 to thaw your account each time. While this might seem like it could cost a lot, remember that credit monitoring costs $10 to $15 per month. How many times a year do you actually need to allow a credit check?
Also, you can thaw it for just one company (like when you're applying for a job) or for a period of time (like when you're car shopping over the weekend and might check credit at three or four places).
For a while, it's highly likely (and expected) that credit reporting companies will make it hard to thaw your account in order to discourage people from using freezes. Since there's no technical reason that prevents them from making it nearly instant over the Internet or a cell phone, chances are states will crack down on them soon enough.
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June 8th, 2007 at 1:01 pm
Can someone other than myself place a security freeze on ALL my credit reports?.because all 3 are frozen and they say i need to write to them to view my credit reports. And I did not place a freeze on them.
June 9th, 2007 at 3:54 pm
It’s not something I’ve heard of before.
What state are you in? The first thing I’d do is read the actual law for your state. Do you have anyone who has power of attorney over you? A daughter or son perhaps? Are you sure it’s a credit freeze and not a fraud alert you’re talking about?
Most importantly, contact the credit agencies and verify your contact information with them. Make sure they don’t have any names, phone numbers, addresses or any other contact information for anyone other than you.
Start there and let me know what you find out.
July 17th, 2007 at 12:34 pm
There are a lot of issues you seem to be unaware of, as are most people who sign up for the credit freeze (I was one of them). It sounds simple, and in theory it is. Unfortunately, in reality you cannot lift the freeze as easily as they make it sound. It involves sending massive amounts of identifying paperwork (sketchy to send via mail), paying a fee and then waiting upwards of three days to get it lifted. As a matter of fact, I tried to lift mine two weeks ago. Still waiting. And don’t even think about contacting the credit bureaus when something goes wrong. You literally cannot speak to a representative at Experian. I even went so far as to call the headquarters and was told specifically that there was no one to help me, that I would need to send an additional letter via snail mail. How progressive of them.
I HIGHLY discourage doing this. Judging from the problems I have encountered, it would not be easy to obtain credit in an emergency. In fact, it would be damn near impossible.
July 18th, 2007 at 3:29 am
@Megan:
Thank you for posting your experiences. I have always suspected that, given a choice, the credit reporting bureaus would make it as hard as possible to lift the freeze, but at least in Maryland, they are required to have an Internet-based process by Januaray 2009. I expect other states will see that the bureaus are sneakily discouraging customers from exercising their rights and won’t put up with it.
Either way, my fundamental disagreement with your logic is that emergency credit needs should be able to be handled by your credit cards. I know it’s common to live with everything maxed out, but, trust me I know, that’s no way to live. Even if they make it hard right now, that’s better for most people in that they won’t be so quick to get into more debt.
I expect that once freezes become more common, the companies will make a massive shift to try and get “debt” business back by pressuring the bureaus to make the process fast enough that a customer can do it from the store while they’re standing there.
Until then, I’m still a proponent of freezes no matter how long or how hard it is to unfreeze the account. Having easy access to credit (even if that was a good thing) is nothing compared to the peace of mind.
November 15th, 2007 at 6:16 pm
Just nrrd know how individually offer the fee to freezeto the three unions so they will manage that application for me
pay them and grt it done
where/how do you apply to which postal default for freeze purposes
Immediate attention will be appreciated
November 15th, 2007 at 6:18 pm
To freeze the accounts, go to the consumer’s union website that I listed. They have the instructions for each state.
http://www.consumersunion.org/campaigns/learn_more/003484indiv.html
November 15th, 2007 at 6:19 pm
waiting postal adressess what form of mail they prefer,amt info they require etc
November 16th, 2007 at 4:39 am
From their website, here’s an example of how to freeze your Equifax file if you live in California (this will not be the same everywhere, just for Equifax and just for California):
* Send by certified mail.
* Include name, current and former address, Social Security number, and date of birth.
* Enclose a copy of a current utility bill or other proof of current address.
* Pay by check, money order, or credit card (American Express, Visa, Master Card, or Discover only). Give name of credit card, account number, expiration date, and Card Identification Number (4-digit number on front of American Express card above account number or 3-digit number on back of other cards at end of account number).
The amount is listed there somewhere, but I guess I missed it when I copied-and-pasted. Anyway, just look up your state. The instructions are right there.
January 14th, 2008 at 10:09 am
Jeremy,
I am going to have to disagree with you. Credit freezes may be an option in the future but not now. First of all the three bureaus always made their money by selling your information and now they are supposed to protect it. Secondly you are putting your information at greater risk by freezing and unfreezing your credit as you have to mail your SSN and bank account information. Thirdly the bureaus tend to only look after themselves so placing a freeze at $10 would have to be done at all threee and thats another $30 to unfreeze. The same with monitoring, they charge extra to monitor all three. Fourthly they make you jump through hoops to freeze or unfreeze your accounts and this is not practical for most people.
Fraud alerts have been proven to work though as you say are not full proof. Still Loudsiren Debix signed up the states of Connecticut, Ohio and the City of Nashville after they had large breaches. Do you really think these states would pay a company to protect the people whose data they breached if it didn’t work. That would be a massive lawsuit waiting to happen. The Identity protection companies are well worth the money for the protection and insurance you get.
People – Don’t ever mail your SSN with your bank account information. You are just asking for trouble if you do. Be smart, stay safe.
Visit identitytheftlabs.com for more info
January 14th, 2008 at 10:51 am
I am no stranger to disagreement and actually prefer for people to speak their mind politely (as you have done). That said, here are my responses:
- They’re not bureaus, but they want you to call them that so they seem more like non-profit government offices and not the money-based companies they actually are.
- You do NOT have to mail your information to unfreeze your account in every state and for Maryland at least, a simple phone or Internet based freeze that takes effect within 15 minutes starting Jan 31st 2009. If other states don’t have similar provisions to block the credit reporting companies from making things difficult, that’s a problem with lawmaker fore-sight, not the freezes themselves. I also expect that as time progresses and more people get the freeze, the credit reporting companies will discover that the only way to make money is to make the unfreeze process as simple and cheap as possible.
- There’s no cost for ID theft victims, but even IF you’re not a victim, it’s $30 one time to freeze (if you’re in a state that allows that much, many states have lower fees and some are even free for non-victims). As for unfreezing, why would you unfreeze all three? Companies that check your credit only go to one of the three in almost all cases. Even IF that’s not the case, how often do people really need access to their credit? Typically when buying a car, house, or getting a new job and how often does a normal family do that? Even if they do it 3 times a year for different things, it’s still far cheaper (and still more effective) than any monitoring service or insurance plan.
- Do I think a state would sign up for a service that didn’t work? Uh… Yeah. I do. Many states signed up for Diebold’s E-voting machines didn’t they? The actions of a big company or a state is hardly an indicator of correct action solely because they’re big.
I encourage my readers to check various options, but I can say this: locking your credit file behind a freeze is currently the cheapest, easiest, and most effective way to prevent credit-based ID theft. Bar none.
May 28th, 2008 at 4:04 pm
In each post you quote almost the same things but do not really comment on what people are disagreeing about.
1. Yes, most places only check one credit bureau but unless you ask (and look quite odd doing so) you won’t know which one to unfreeze and then you are still probably spending the 30$ to do so (one “car dealer” may use one while another uses a different one).
2. To process the unfreeze in MOST states you must mail a letter with your personal information. You continue to say that Maryland is different in 2009 well I hate to tell you this but that’s almost 6 months away!! Until then you have to mail the documents you yourself are telling people not to.
3. Only Experian currently has online access to remove a freeze and it can only be done in very specific states.
4. Freezing your credit report isn’t free. The fee can run you about $30. There is also a small fee to unfreeze your credit report. To freeze your credit report, you must contact each of the three credit bureaus. You will be assigned a pin number that will enable you to unfreeze your account when you do apply for credit.
5. You can view the laws for all states at http://www.consumersunion.org/campaigns/learn_more/003484indiv.html
6. Also a freeze does not stop your current creditors, someone can speak to an existing creditor and change your credit information.
7. However I do agree.. Only a security freeze allows the consumer to limit access to his or her consumer reporting file. The federal Fair Credit Reporting Act creates two types of fraud alerts, but the only type available to consumers who have not yet been victims of identity theft, called the initial fraud alert, expires after 90 days unless renewed. The very short time period makes this a poor tool for ID theft prevention. The extended fraud alert is restricted to ID theft victims. Neither the initial nor the extended fraud alert stops the release of the credit report or the credit score.
May 29th, 2008 at 4:36 am
1. You’re right if you’re shopping around for credit (which I think is silly since you’ll probably get a better rate by just going to a credit union and avoiding dealer financing). Otherwise, why does it look silly to ask which they use? I’m more than happy to tell them “I have a credit freeze and need to know so I can unlock it for you”.
2. I don’t recall telling people not to mail unfreeze documents. I do remember saying the credit report companies would make it as hard as possible unless they are forced not to or realize that lots of people are getting freezes and they need to make the process fast and easy to make money again.
3. Whether online or not, some states require that thaws take place in 15 minutes or less. Georgia is one such state.
4. It is free if you’re an id theft victim. Otherwise, it CAN run you up to 30 to place the initial freeze if your state doesn’t already mandate a lower fee.
5. I have that same link in the article up there, but it doesn’t hurt to list it again.
6. Yes that’s true and is also why I said “even if a thief has ALL of your personal data, they still can’t do anything in your name that requires a >>>credit check<<<”
7. Well said.
June 3rd, 2008 at 10:34 am
I may do a credit freeze after all my new bank accounts are set up and I get a new credit card. Does having a freeze mean I can never have a card, or that I just need to lift the freeze to apply for a new one? An established one can still be used, right?
June 3rd, 2008 at 12:33 pm
That’s it exactly. Current cards/accounts/services are completely unaffected, only new accounts will be refused. To open a new account, you will contact the credit reporters and ask them to thaw it for either a specific company or a period of time (over the weekend for example) after which it freezes again.
June 3rd, 2008 at 7:27 pm
Can you show me the California state freezing info link? I know it’s here somewhere, but I’m slightly frazzled, sorry for the that!
Thank you, I will freeze my stuff after I get set up.
June 4th, 2008 at 3:35 am
5. You can view the laws for all states at http://www.consumersunion.org/campaigns/learn_more/003484indiv.html
July 21st, 2008 at 12:14 am
Jeremy:
Your information is excellent but its not technically correct. For example, on credit freezes, you state:
“Not will this prevent ANYONE from accessing your credit without your prior permission, because thawing the account is currently not an instant process, it will help reduce the amount of impulse spending and new credit that has been getting people into so much trouble.”
Your wrong; a credit freeze prevents MOST activity but not all. First, if you have an existing account with any merchant, they continue to get unfettered access…period. Secondly, any of the three credit agencies or merchants can access data under the provision of “maintenance and upkeep” portion of the law. They just say they need access on your file to verify or update data or records, and they get it. This is a hige loophole, it allows for abuse because there are no penalties or “watchdogs”. Finally, the court system, the FEDs, and even corporations via pending class action suits can get access. In summary, its not even close to being a “Freeze”; its a band-aid that consumers got suckered into paying for when it should be free.
The best way to fix this is to send a searing message (or e-mail) to our elected representatives and hold them accountable for fixing the holes in the system! If we can’t get their attention with our words, we’ll get it with our VOTE!
July 21st, 2008 at 4:41 am
Chris: You are right and thank you for adding details. I meant to say that it prevents a would-be thief from getting your data (for example, you brother or some schmoe in Nicaragua). The exceptions you listed, I’m aware of, but didn’t think to clarify.
I did not know about the loophole however. Do you have any information or links concerning that?
Regardless, credit freezes are still the best protection by far compared to any other options.
August 21st, 2008 at 10:27 pm
Does putting a credit freeze on your account prevent your credit score from increasing?
August 22nd, 2008 at 4:18 am
@Jesus:
No. It won’t affect any reporting to your credit card by people you already have an existing relationship with. Instead, it prevents any NEW credit checks from occurring.
May 8th, 2009 at 1:05 am
I am going to have to agree with Jason above. My state, Nevada, seems to have the certified mail requirement, asking for SSN, name, date of birth, utility bill, driver’s license, previous addresses…. Seriously, doesn’t this amount to giving your identity away? Just stuff it all in an envelope and it’s handled by the postal service and the clerk that gets it at Equifax, Experian and Trans Union….. Your thoughts?
May 8th, 2009 at 6:14 am
It’s no more a risk than sending bills, birthday cards, contracts, or anything else that goes by mail. For someone to get it, they’d have to know it was important and want it that badly. Even if someone did manage to get that data, once your credit is frozen, it’s not going to help them much.
May 11th, 2009 at 5:34 pm
Jeremy-
I put a credit freeze on my credit with Experian and Trans Union. It looks like Equafax does not have an online(easy) way to place a freeze except by mail. Since I have a freeze with Experian and Trans Union do I still need to do one with Equafax?
Thanks
July 15th, 2009 at 4:34 pm
Great Information – I wanted to share this information today with my friends on Twitter because I do feel we all tend to get a bit lazy about our information. Predators are everywhere!
September 16th, 2009 at 1:40 pm
I loss the PIN number for my account. How do I unfreeze my reports without the PIN?
September 16th, 2009 at 5:06 pm
Richard: You don’t. That’s sort of the point. You’ll have to contact the credit reporting companies and apply for a new PIN.