Tuesday, October 25, 2005

Prevent Identity Theft by Freezing your Credit File

The extreme identity theft prevention method you may
have never heard about.

But, it's arguably one of the few tools available that
actually gives the you the ability to prevent
credit fraud stemming from identity theft before it
actually happens.

It's called a "credit file freeze".

With a credit freeze, no one can open any form of
credit in your name. Your credit file is off limits to
potential lenders, insurers and even potential
employers.

Credit file freezes are an effective way to prevent a
thief from opening new accounts or obtaining a
mortgage in your name.

Under a freeze, no one can get new credit under your
name unless you lift the freeze.

If your credit is "frozen" and someone applies for
credit in your name, the lender will most likely deny
the application.(Sidenote, lenders you already have an
existing credit relationship or legitimate collection
agencies working on their behalf will still have
access to your credit file.)

With a credit freeze, an id thief can have your name,
birthday and Social Security number and it won't
matter.
No credit will be issued as in California
where the credit freeze law has been in effect since
2003. According to their state law,
once the credit bureaus receive your request they must
freeze your report until you notify them differently.

However, this does not mean that you won't be able to
get credit for yourself or allow potential employers
to run a background check.

The three major credit bureaus assign a personal
identification number (PIN) to you when you freeze
your report. Using your authorized and unique PIN you
can lift the freeze when necessary.

But, until recently in all but a dozen states this
credit file freeze has been unavailable to most
consumers.

In the few states where it's actually available, it
has been costly and/or available only to documented
identity theft victims.

Why?

The credit industry makes billions gathering and
selling consumer data, so it's not necessarily in
their best financial interest to support legislation
which would restrict their ability to generate
revenue. Same for the retailers who prosper by
granting instant credit accounts to consumers while
their shopping.

Those retailers get their data from the three major
credit bureaus to support the instant credit granting
decisions.

However, your credit information is ultimately yours
to protect -or- leave exposed for an identity thief to
steal.

Various state legislators evidently feel the same way
in the wake of the many publicly reported identity
theft disclosures this year. Beginning in January
2006, states such as Colorado, Louisiana, Connecticut,
and Maine will phase in laws for credit file freeze
eligibility open to all consumers whether or not they
are already an id theft victim.

So, our tip for today is to contact each of the three
major credit bureaus and inquire into your eligibility
for freezing your credit file as well as the changing
costs:

Equifax - (800) 685-1111

Experian - (888) 397-3742

Trans Union - (888) 909-8872

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