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Credit Freeze Can Protect Against Identity Theft

One step financial account holders can take to protect themselves against identity theft is to freeze their credit. The credit freeze is currently the most powerful weapon individuals have against many types of ID theft. But, taking this step can provide some of its own hassles and consumers need to plan ahead.

According to the Federal Trade Commission, credit freeze laws vary from state to state. In some states, anyone can freeze their credit file, while in other states, only identity theft victims can. The cost of placing, temporarily lifting, and removing a credit freeze also varies. Many states make credit freezes free for identity theft victims, while other consumers pay a fee – typically $10.

The credit bureaus will typically ask the consumer requesting a free credit freeze due to identity theft for a copy of a police report, FTC Identity Theft Complaint / Affidavit, or other government law enforcement agency report.

Non-victims can also freeze their credit, for a fee (typically higher than any charge for identity theft victims). Charges vary among each of the three credit reporting agencies – Equifax, Experian and Trans Union.

According to Equifax, placing a credit freeze does not affect a person’s credit score – nor does it keep a person from getting a free annual credit report, or from buying his or her credit report or score.

If a person who has placed a credit freeze with the credit reporting agencies wants to apply for a loan or credit card, or otherwise needs to give someone access to the credit report he or she would need to temporarily lift the restriction. This can be done by using the PINs from the different reporting agencies and, usually, by paying a fee.

However, there is typically a delay between the request and the freeze actually being lifted. The delay could be up to three business days. Additionally, a person likely will not be able to request a temporary lift of a security freeze during non-business hours or on weekends.

This means the person with the frozen credit would not be able to get the "instant" credit offered by some auto dealers and retailers.

And a person may go through the trouble and potential expense of placing a credit freeze with only limited protection against identity thieves. The Federal Trade Commission cautions that a credit freeze, "...will not protect you, from an identity thief who uses your existing credit cards or other accounts. There are also new accounts, such as telephone, wireless, and bank accounts, which an ID thief could open without a credit check. In addition, some creditors might open an account without first getting your credit report. And, if there’s identity theft already going on when you place the credit freeze, the freeze itself won’t be able to stop it.”

The Consumer Sentinel Network (CSN) was started in 1997 to collect fraud and identity theft complaints. The CSN now has more than 7.2 million complaints, including those about credit reports, debt collection, mortgages, and lending, among other subjects. [Source]

Based in Colorado, Rob Douglas is an identity theft expert and has been fighting against fraud and cyber crime for more than a decade. He is the editor of and a speaker at identity theft conferences across the USA.

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