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Should You Place A Freeze On Your Credit Report?

Credit freezes provide new protection against identity theft

August 13, 2008

A growing number of states have passed laws allowing consumers to tell the three major credit reporting agencies - Equifax, Experian and TransUnion - to place a "freeze" or block on sharing their credit reports. A credit freeze prevents potential creditors and other third parties from accessing credit reports without your approval.

Even if the thief has your Social Security number, he may not be able to steal your identity if your have a freeze on your credit report. Most businesses will not open credit card or other accounts without checking your credit history at the reporting agencies. If your credit files are frozen, an identity thief probably would not be able to get credit in your name.

While the credit agencies will freeze your account, there is a charge for that service. A credit report freeze costs $10 each to place a freeze with the credit bureaus, or $30 total for the three reporting agencies. The fee is waived in most states if the consumer has already been a victim of identity theft.

But what happens when you want to get a bank loan or apply for a credit card? A freeze on your credit report means you won't be able to do it. The freeze remains in place until you ask to remove it. To lift a credit freeze, consumers must contact each credit reporting agency and pay the required fee. By law, the maximum each company may charge is $12.

Consumer advocacy organizations have been petitioning the credit bureaus to make setting up a credit freeze easier and quicker. They claim that consumers have been slow to sign up for them because the procedure is time-consuming and costly.

While freezing your credit report provides a measure of protection, it's not bulletproof. Identity thieves could still use your existing credit card or other accounts, and some new accounts may not require a credit check – such as telephone, wireless, and bank accounts. But a freeze can prevent the vast majority of identity theft that involves opening a new line of credit.

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