I realize that some of my readers are dreading another chilly winter, but if you live in one of the 21 states that allow its residents to freeze, consider yourself lucky.
I'm talking about the ability to shut down access to your credit reports. There's no magic bullet that guarantees 100 percent protection from identity thieves, but the ability to slap what's known as a credit freeze on your accounts at the three credit bureaus is the best line of defense available against one of the worst types of identity theft: someone posing as you opening new lines of credit or getting new loans.
To freeze or not to freeze
When you put a freeze on your credit reports, it shuts out new lenders and creditors from checking into your personal financial history. (The companies you already do business with retain their ability to monitor your accounts.)
A freeze gives you more protection than a fraud alert. An alert is merely a yellow light for creditors and lenders that requires them to verify your information personally with you before granting new credit or loans. A freeze goes a step further by not allowing them to look at your record at all.
Of course, a freeze makes it extremely difficult, if not impossible, for you — or anyone masquerading as you — to get a new credit card or loan, because lenders aren't apt to grant new accounts if they can't size up your creditworthiness.
But people who choose to freeze their accounts can also unfreeze them when they need to let a lender take a look. This can happen in a matter of minutes once you contact the credit bureau — although the rules state that it could take up to a few days.
But what's ridiculous is that not every American currently has the right to protect themselves with a credit freeze. Less than half the states currently have laws that explicitly allow residents to lock up their credit reports to outsiders.
Disturbingly, a handful of states have even decided that a freeze should only be available to identity theft victims. That's right — in five states you can't protect yourself until after you've been robbed.
Here's a breakdown of the states with freeze laws:
Freeze-friendly states: California, Colorado, Connecticut, Delaware, Florida, Illinois, Kentucky, Louisiana, Maine, Minnesota, Nevada, New Hampshire, New Jersey, New York, Oklahoma, North Carolina, Pennsylvania, Rhode Island, Utah (effective September 2008), Vermont, Wisconsin.
States with post-theft freeze rules: Hawaii, Kansas, South Dakota, Texas, Washington.
Loosening a law
About 95 percent of respondents to a recent Bankrate.com poll favor allowing everyone to get a credit freeze; just 3 percent think it should be available to theft victims only.
If you don't see your state in the freeze-friendly list, give your government representatives an earful — or e-mail-full. There's simply no good reason why every state (or the federal government) shouldn't mandate that all citizens are able to protect their financial identity.
If you do live in a state where you can freeze your credit reports, I recommend that you do so. It's going to take some patience — the three credit bureaus, Equifax, Experian and TransUnion, don't exactly roll out the red carpet to help you put on a freeze. You'll need to contact each bureau separately, and must make a written request.
Freeze is free for some
Here's where to find each credit bureau's credit report freeze rules:
- Equifax: https://www.econsumer.equifax.com/consumer/sitepage.ehtml?forward=elearning_credit14 (scroll down to "Place a Security Freeze on Your Credit File")
- Experian: http://www.experian.com/consumer/security_freeze.html
- TransUnion: http://www.transunion.com/corporate/personal/fraudIdentityTheft/preventing/securityFreeze.page
If you've been a victim of identity theft and have the police record to prove it, your freeze is free of charge. The rules for non-victims vary by state; some offer free freezes, others levy a charge of $10 or so.
Once your freeze is in place you'll receive a personal identification number (PIN) that allows you to lift (thaw) the freeze with a phone call or by going online; the rules vary among the three credit bureaus.
Again, you may be hit with a small fee to temporarily lift your freeze. If you want to permanently remove your freeze, however, the credit bureaus are all to happy to make that change free of charge.
— Suze Orman is a best-selling author and award-winning broadcaster whose new book, "Women and Money," will be published in March 2007. She can be contacted through http://www.suzeorman.com.
