Assessing the Credit lock phenomenon
Of course you’re worried about identity theft. Everyone is. The prospect of having a hacker or fraudster opening up a new account in your name is scary. It could take years before you see just how devastating an effect such new account fraud could have on your credit. The fear of fraud after the Internet has led states to pass “credit lock” or “credit freeze” laws. Currently, 47 out of 50 states and the District of Columbia allow credit freezes, and the three credit unions have offered credit freezes voluntarily to states that have not passed it into law or who place restrictions on when it can be used. But before you jump into a credit lock without knowing what it would mean, take a chance to look at what this would mean.
Video: Fraud Alerts and Fraud Freezes
What does a credit lock do?
In order to open a new account, a lender has to check your credit report. In effect, a credit lock or freeze blocks your report from being accessed by banks, creditors, and other lenders. This means that you cannot open any new accounts while your credit is frozen. It also means that no hacker with your sensitive information can open a new account either.
Why would I want this?
If you are worried about your name and social security number falling into the wrong hands, or have reason to believe it already has, a credit freeze is the only way to guarantee no fraudster will open a new account under your name during this time. It all but guarantees your credit’s safety from this method of attack. If you’ve already had an identity theft case, the decision will be much easier to make and face easier legal work. If you are not planning on making any major purchases or taking out a new loan during this time, then this is one of the better ways to guard against identity theft.
Sounds great. What’s the catch?
Video: The Impact of Identity Theft
For starters, a credit lock is not airtight. It can’t stop credit fraud once an account has already been opened, and it can’t protect against things like lost or stolen credit cards or websites with your card numbers that are hacked. Secondly, when your account is locked, it takes several business days to unlock. If you see a new great deal on a credit card, car, or new home that expires in just a few days, you will not be able to acquire it. While it makes sense to not have your credit frozen when in the market for a new house or car, the latest best credit deal can come at any time.
How to do it
If you know what a credit freeze does, are aware of the risks, and still think the decision would be right for you, call the three major credit bureaus and request a credit lock or credit freeze. You may be charged a fee, but generally they don’t go higher than $10. Contact the bureaus at:
Equifax
1-800-685-1111
Equifax Security Freeze
P.O. Box 105788
Atlanta, GA 30348
Experian
1-888-397-3742
Experian Security Freeze
P. O. Box 9554
Allen, TX 75013
TransUnion
1-888-909-8872
Trans Union Security Freeze
P. O. Box 6790
Fullerton, CA 92834-6790
