Credit Freeze

Step One: Freeze Your Credit, and Help Leave Fraudsters Out in the Cold

According to the Justice Department’s latest statistics, approximately 7% of U.S. adults can expect to experience some form of identity theft this year. That’s one in every 14 people. And according to the FTC it takes an average of about six months to resolve the mess that ID theft leaves in its wake. Imagine that. Someone steals your info and it takes six months to get things back to normal. And it’s even worse if someone steals your tax refund. Last year it took an average of nine months to get it back. If you combine those statistics with the seemingly non-stop reports of data breaches from large corporations, I think it’s safe to say that this is an issue that threatens just about every American. That’s why over the next few weeks I’m going to do a series of posts on the things you can do to protect yourself.

Without a doubt, one of the best and most important things you can do to protect yourself online is to freeze your credit record. Consumer expert Clark Howard has been advocating this approach for years, and for good reason. The back-story is that as identity theft became a bigger and bigger threat, the credit bureaus developed this feature as a way to help victims protect themselves from further abuse. Pretty soon word got out, and other people–we’ll call them, not yet victims–started demanding access to this as well. In a nutshell, a credit freeze tells the credit bureau to lock up your information, so that no one can access it until you “unfreeze” it. No one will then be able to make inquiries on your record or open up accounts in your name (not even you).

Here’s how it works: basically, you contact all three credit bureaus, and ask for a credit freeze. (You can also usually do this online at their website.) They will ask you some personal information to verify your identity. Once they’ve confirmed that it’s you, they will issue you a special code. Keep this code extremely safe; you will need it to “unfreeze” your credit in the future.

Later, when you need access to your credit (to open a new loan, turn on the utilities in a new apartment, etc.), you can unfreeze it in one of two ways: a “thaw” or a full “unfreeze.” A “thaw” will temporarily open up your credit file again. You can request a thaw for a temporary period of time or for a specific lender. Once that’s done, your credit record goes back to “frozen” status. See Clark’s website for details on how to do this. A permanent “unfreeze” is exactly what it sounds like, your record goes back to the open status it had before you did anything.

To recap, a credit freeze is the best first step you can take to protect yourself. Once it is setup, you can rest assured that no thief can steal your information, and use it to open up new lines of credit in your name. But this is obviously just a first step. In my next few posts, I will discuss tips to protect you if someone hacks into your bank account, credit card, debit card, or steals your tax refund. In addition, I’ll give out some general tips toward protecting your information online, so that the criminals don’t get your info to begin with.