Identity Theft

IDENTITY THEFT….A while back I got an email asking me if I’d learned any good ways to stop identity theft during the research I did for my identity theft article earlier this month. The answer is yes ? but only if you live in California, Louisiana, Texas, Vermont or Washington, the states that currently allow you to request a “credit freeze” from the three major credit reporting agencies. Bankrate.com describes what a credit freeze is:

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. Here’s how it works.

When you apply for a loan, credit card or cell phone, the company issuing credit contacts one of the three credit reporting agencies and requests to see your credit file. If you have a freeze on your account, the company will be told that it cannot see your credit file because your account is frozen. At this point, most companies would not allow the loan, issue the credit card or activate the cell phone.

But 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 credit bureaus assign a personal identification number for you when you freeze your report. Using this PIN, you can lift the freeze when necessary.

In other words, you’ll be notified whenever someone tries to take out credit in your name. If that someone really is you, you just unfreeze your credit report using your PIN and the credit is granted. Unfreezing costs a few dollars each time you do it.

The downside? If you open up a charge account or try to take out a car loan, you’ll have to wait a few days until you’re contacted and provide your PIN. No more driving off the lot the same day. Plus it costs a few dollars to freeze and unfreeze your account.

The upside? Almost no more risk of identity theft. Crooks can still steal your credit cards, of course, but that only costs you a maximum of $50 per card and doesn’t wreck your credit report in any case. You just have to report them as stolen.

Thanks to Debra Bowen, who’s currently running for Secretary of State here in California, I can request a credit freeze on my credit reports, and I’m planning to do exactly that. Other states are following suit.

But ask yourself this: why is this happening at a state level anyway? Why not at a federal level? And why do you have to pay for it? And why can’t you make one request instead of having to send a certified letter to three separate companies? And why does it take “several days” to unfreeze your account each time you do it? Why not a few hours? In fact, why isn’t a credit freeze the default option for credit reports in the first place?

Those are all excellent questions, and the answer is simple: because the credit industry doesn’t like credit freezes and wants to make them as confusing and hassle prone as possible. But that’s why we elect a government, isn’t it? Call your representative and complain.