Credit Bureaus Offer Credit Freeze

by Rick Kam

TransUnion and Equifax to offer credit freeze services according to a September 22, 2007 article in ConsumerAffairs.com by Martin Bosworth.

"offer consumers the ability to "freeze" their credit files in all 50 states in order to protect themselves against identity theft and fraud. The service will be available in the 11 states that do not already have credit-freeze laws, costing consumers $10 to set the freeze and $10 to unlock it, and will "meet or exceed the requirements" of states with existing freeze laws. The freeze service will be free to victims of identity theft, and is scheduled to roll out Oct. 15."

This means that you can instruct these two credit bureaus to freeze your credit making it more difficult for an ID thief to set up a new fraudulent credit card or take out a loan using your personal information. Experian is the other major credit bureau. They have not indicated whether or not they will also offer this service.

The question is whether or not this is a good solution to protect you from ID theft? There is a $10 cost to freeze and unfreeze your credit. If you are a victim of ID theft, the cost to freeze your credit is $0.

Our suggestion is to look at using this tool if you are a victim of ID theft versus a preventative measure. There are several reasons for this.

1. If you are a victim of ID theft, it can prevent more fraudulent accounts being set up by the thief

2. If you are not a victim of ID theft, this tool requires you to take an action each time you want to open a new credit line.

3. A credit freeze only protects you against credit fraud. There are many more ways ID theft can occur that this tool will not address including debit fraud, medical ID theft, criminal misuse of your ID etc.

The good news is there are new preventative tools entering the market that provide a 360 degree protection against all of these issues and provide better protection. These services scan both financial and non-financial data sources and do a much better job of protecting your identity. I will discuss more on this topic in future blogs.

Costly Free Credit Reports

By Heather Wells (Recovery Advocate)

Do an online search for “free credit report” and you’ll end up with a dozen or more websites promising online credit reports (and often credit scores) for FREE. Most of these companies even have the word “free” in their name, but don’t be fooled, there’s nothing FREE about their services. Many will entice people to sign up for a product that comes with strings attached. Most will request a credit card number to enroll and then will charge you if you do not cancel the service within a specific grace period.

A recent post (July 24, 2007) on the blogsite The Red Tape Chronicles written by Bob Sullivan explains that “one site, for instance, requires enrollment in pricey credit monitoring service, which can only be canceled online after precisely 23 days. Another automatically enrolls users in a discount travel service. And some hint that the real free credit report site established by Congress -- AnnualCreditReport.com -- isn’t all it’s cracked up to be.” He goes on to say that many of these sites actually can be traced back to the credit bureaus either directly or by affiliation.

There’s only one legitimate source where you can obtain your FREE credit reports and that’s http://www.annualcreditreport.com/. The law requires that each of the major credit reporting agencies-Equifax, Experian, and TransUnion-give you a copy of your credit report every year at no charge. This law was passed as part of the Fair and Accurate Credit Transactions Act (FACTA) and was a real milestone for consumer rights.

Increased consumer awareness and knowledge is a good thing. It’s a positive sign that more folks are interested in what’s being reported in their credit files. Everyone should check their credit reports at least once a year to make sure that all of the information contained in them is accurate and up to date. You should also check your reports for any information that is fraudulent, which could signal that you are the victim of Identity Theft. This includes accounts as well as personal information such as addresses and phone numbers.

So, before you give over your credit card number for something that is supposed to be “free,” don’t do it. Go to http://www.annualcreditreport.com/.