The prospect of identity theft is a frightening one. The idea of someone applying for – and getting – loans and credit cards in your name, running up those credit card debts in YOUR name without you ever knowing is a nightmare for anyone. It’s even worse a nightmare for someone who has worked hard to keep their credit records clean.
If you’re a victim of identity theft, the federal government has always given you the right to put a ‘fraud alert’ on your credit reports. Anyone in any state can request that one be placed on their credit file, in fact. When your account is flagged with a fraud alert, creditors are supposed to contact you whenever someone attempts to get a credit card or loan in your name. There’s no law, however, requiring that creditors actually MUST notify you – or even check to see if there’s an alert.
In addition, many states give you the right to ‘freeze’ your credit report and prevent anyone from accessing it at all. In 2003, California made it legal for any consumer to contact any one of the credit reporting agencies and place a ‘freeze’ on their credit report. Since that time, several other states have followed suit, and over the next year, several more will. By July 2006, ten states – Californian, Texas, Louisiana, Vermont, Nevada, Illinois, Washington, Connecticut, Maine and Colorado – will allow consumers, or at least those who have been victims of identity theft – to place a complete freeze on their credit report, effectively preventing any credit from being issued in their names.
When you freeze your account, you essentially refuse your permission for the credit reporting agencies to allow access to your credit report. When you apply for a credit card, loan or credit card, the company contacts one of the three major credit card agencies to verify your credit. If you’ve frozen your credit report, the credit card, loan or cell phone company will be told that your report is frozen and can’t be issued. Generally, most companies will not allow the credit card or loan at this point.
Because the credit reporting agency issues a PIN number to you for your own identification purposes, you can apply to have the ban temporarily lifted in order to allow a legitimate request to be honored – for instance, if a prospective landlord or employer requires a credit report before renting to hiring you. Without the PIN number, the credit agency simply will not honor a request for a credit report. An identity thief can know your name, social security number, birthday and shoe size – without your PIN number he won’t get credit in your name.
The procedure to freeze your credit report varies from state to state and agency to agency, and though a request made to one agency must be honored by all, it’s safer to place a freeze with all three agencies at the same time. If you’re a victim of identity theft, the freeze must be instituted free of charge. Depending on state, you may be allowed to request a freeze for a small fee even if your identity has not been touched.
