Identity Theft vs. Credit Security Freeze

 

 

Who...What...Where...When...Why, and How?

 

Who Should Consider a Credit Security Freeze?

 

Checks on credit are completed by more than lenders: insurance companies, rental housing, certain investments, utility service providers, cell phone companies, potential employers, and others.

Only you can request that a security freeze be placed on your credit file and only you can request that it be removed or temporarily lifted.

The credit security freeze has inherent flexibility which enables the account owner to "thaw" their credit for specific inquiries for short amounts of time (for a small fee).  Additionally, the security freeze will generally remain on your credit file until:

1)     you request that it be removed, or

2)     you request a temporary lift of the security freeze for a specific party or parties, or

3)     a specific period of time, as applicable under state law or the voluntary security freeze program.

 

What is a Credit Security Freeze? 

 

A credit security freeze is designed to prevent the information in your credit file from being reported to others, such as credit grantors and other companies,

1)     except those exempted by law, or

2)     those for whom you contacted the credit reporting company and requested that they temporarily lift the security freeze, or

3)     those that access information during a period of time when you requested the credit reporting company to temporarily lift the security freeze.

 

Where Do You Go To Freeze Your Credit? 

 

A credit security freeze prohibits access to the frozen social security number for the purposes of accessing credit through the three major credit reporting bureaus (Equifax, Experian, and TransUnion). It "freezes" a person's account (designated by their social security number) from new credit cards, loans, lines of credit, or any other access.  A credit security freeze prevents anyone's access to credit information – including the account holder. This means that you can't open an account spontaneously.

 

Three simple clicks on the internet will enable anyone with a social security number to prohibit their credit information from being accessed – including children (there is a special section to freeze minors' social security numbers). Experian, Equifax and TransUnion credit reporting bureaus are either compelled by law (laws in 47 States and Washington, D.C.), or have voluntarily offered credit security freezes to anyone requesting them. Complete the online forms and your account is frozen. There may be a nominal fee, depending upon your state of residence.

 

When and Why Freeze Your Credit? 

 

If you are an ID theft victim you may be eligible for free security freeze services as provided by your state's security freeze law. You will need to provide the credit reporting company in writing an ID theft report or similar documents as required by your state.  However, you don't want to wait until you are a victim; you want to freeze your credit to avoid becoming a victim of identity theft or fraud.

 

How Do Identity Thieves do it?

 

  1. First, they steal your personal information by...
  2. Going through your mail or trash, looking for bank and credit card statements, pre-approved credit offers, and tax information.
  3. Stealing personal information from your wallet or purse such as identification, credit, or bank cards.
  4. Completing change-of-address forms to redirect your mail.
  5. Acquiring personal information you share on unsecured sites on the Internet.
  6. Buying personal information about you from an inside source -- for example, a store employee that gets your information from a credit application or by "skimming" your credit card information when you make a purchase.
  7. Getting your personnel records at work.
  8. By being family members, roommates, or close friends that have access to your personal information.
  9. Then they use your personal information by...
  10. Opening new credit card accounts using your name, date of birth and Social Security number. When they use the credit cards and don't pay the bills, the delinquency is reported on your credit report.
  11. Establishing phone or cellular service in your name.
  12. Opening a bank account in your name and writing bad checks on the account.
  13. Counterfeiting checks or debit cards, and draining your bank account.
  14. Buying cars by taking out auto loans in your name.
  15. Calling your credit card issuer and, pretending to be you, changing the address on the account. Bills get sent to the new address, so you don't realize there's a problem until you check your credit report.
  16. Filing for bankruptcy using your name to avoid paying debts they've incurred under your name.
  17. Need we go on?... 

References used for this article are: 

The Minnesota Society of Certified Public Accountants – ‘ A Credit Security Freeze Will Keep You Financially Warm’ by Dan Puhl, CPA, MBA  (01/12/2010) https://www.mncpa.org/members/members_index.asp?entryurl=/email/index.asp?id=387

Trans Union http://www.transunion.com/

Experian http://www.experian.com/

Equifax http://www.equifax.com/home/en_us