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Should You Consider Freezing Your Credit?

April 2008
Should You Consider Freezing Your Credit?

By Pavittar Safir

Credit freeze—also called security freeze—is now available to residents of Georgia. All three credit bureaus, Equifax, Experian, and Trans Union, will put a temporary or permanent freeze on your credit file upon request. This will prevent unauthorized individuals from stealing your identity and potentially harming you.

Millions of people in the USA have been victims of identity theft, and thieves have fraudulently charged billions of dollars in other people’s names. Identity theft or identity fraud occurs when someone wrongfully steals another person’s personal information and fraudulently uses it for economic gain. Many unauthorized people have taken money out of victims’ bank accounts and, in some cases, run up vast debts to tarnish excellent credit. Besides financial harm, identity theft victims have to spend a lot of time and money to clear their good names. In some cases victims even had to spend time in jail because the thieves had given their stolen checks to merchants who obtained arrest warrants for the account holder when the checks bounced!

In Georgia the cost of putting a security freeze on your credit file is $10 with each of the three bureaus. There is no fee if you have been a victim of identity theft and submit a valid copy of the incident report or complaint filed with a law enforcement agency. A freeze on your credit history will prevent unauthorized persons from establishing new credit pretending to be you and incurring huge debt. It is better to spend the small fee to freeze your account than to spend thousands of dollars and many years to restore your good name if you become a victim. A credit freeze will still allow the federal and state government agencies, the people you already have accounts with, and credit monitoring agencies to access your credit history. However, new credit cannot be granted without your express consent.

You should not put a freeze on your credit report when you are in the market for a mortgage, car loan, home equity loan, competitive insurance quote, etc., as the issuers will be reluctant to consider your request, as they cannot access your credit history. You have to temporarily remove the freeze to facilitate the processing of a new credit application. The cost of removing the freeze is also $10 with each of the three credit bureaus. You will have to pay the fee again when you wish to freeze your account again.

A credit freeze does not, however, absolve you of your own responsibility to safeguard your personal information. You must check your bank, credit card, and other statements thoroughly and report any irregularity to the proper institution. You must put a fraud alert with all three of the credit bureaus and actively help them in their investigations. It is amazing how so many people just throw these statements in the trash before shredding them. In this age of the Internet, “phishing” has also become a major problem, so be very careful what information you give out on line or by phone.

The Identity Theft and Assumption Deterrence Act passed by Congress in 1998 made identity theft a federal crime and gave the Federal Trade Commission (FTC) the power to enforce it. Besides the FTC you must still report the crime to the local police, the postal inspection service if someone stole your mail, the three credit bureaus, and other institutions like your bank.

Under the law, you are entitled to one free credit report per year from each credit bureau. You must request these reports and check them thoroughly to ensure their accuracy. The best approach is to space your request for free credit report from the bureaus so that you can review the most recent picture. You must report the errors, if any, to the credit bureaus in writing or online and give them all the pertinent information available with you.

Prevention, it is said, is the best medicine. It is better to be safe by

· regularly checking your credit reports,

· opting out of unsolicited offers for new credit,

· shredding documents containing personal data,

· safeguarding your checkbooks, etc.,

· but above all putting a freeze on your credit reports if you are NOT in the market for immediate credit

than to be a victim and spend time and money to restore your name.

How to request a credit freeze

The request for a credit freeze must be made either online or by mail (preferably certified). You need to provide the following information:

· Your full name including suffix, e.g. Jr., Sr., etc.

· Your Social Security number,

· Your date of birth (month, day and year),

· Current and former addresses if less than two years at current address,

· A copy of a government issued identification like driving license and a copy of a utility bill, insurance, bank statement, etc., showing your current address.

· $10 in payment or a legible copy of the complaint filed with the police or other investigative agencies.

Completed requests should be mailed:

1. Equifax Security Freeze

PO Box 105788

Atlanta, GA 30348

2. Experian Security Freeze

PO Box 9554

Allen, TX 75013

3. Trans Union

Fraud Victim Assistance

PO Box 6790

Fullerton, CA 92834

The same procedure applies when you want to remove the credit freeze, either permanently or for a short time period.

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