The new credit freeze law in the US
New Identity Theft Law Allows Use of Free Tools
After decades of State Mandated differences in the ability of consumers to freeze and hence lock their credit, a new US law now allows all Americans to freeze their credit free of Charge. This important change now allows countless Americans new identify theft protections for free.
Your Credit File
A credit file is a collection of data containing all your past and present lines of credit. This file includes amounts owed, delinquencies, total credit extended, and numerous other financial metrics about you and sometimes your family. The credit file is based off of your name, current and past addresses, date of birth, and your social security number. If someone gets hold of all of these pieces of information they may be able to apply for credit cards or other lines of credit in your name.
The Social Security Number the Way it Shouldn’t Be
The social security number that you were assigned was never intended to be used as your national identification number or your credit file number, but it is. Originally created in the 1930s as a method of tracking people’s social security benefits it was the first national number given out in America and hence quickly became the only real national unique number.
That your social security number is tied to your credit file is odd, that someone can in theory walk into a store with your social security number and walk out with a new couch is odder still. Combined with your address and date of birth, these three pieces of information are all that are required to wreak havoc on your credit history.
Identity Theft
In the past ten years as the problem of identity theft has grown worse Americans have been turning to one of two methods to protect their social security numbers. Method One is called Credit Monitoring and is done by private firms that charge a monthly or annual fee to notify you of when a credit line has been opened. Method Two is to freeze your credit. Credit freezes involve locking your credit file with a passcode. Only after your social security number is unfrozen or lifted (with the passcode) can a new line of credit be opened. The differences between these two methods are not unlike having a bell on your door that chimes when someone breaks into your house as opposed to a lock on that door.
Who would not choose the lock?
Up until recently there was a cost to both freeze and unfreeze your credit files. The cost depended greatly by the state in which you lived in, generally it was anywhere from $5 to $30. Given that there are three separate agencies, this had the prospect of being rather expensive.
Recent Changes
That has all changed with a new law that allows all Americans to now do this for free. This is a big win for consumers. Unless you are in need of opening up new lines of credit on a monthly basis, I cannot see why you would not want to freeze your credit. For elderly Americans, this is something that needs to be done very soon.
How to Freeze Your Credit
The best complete guide to freezing your credit can be found online at Clark Howard. Be prepared to spend at least 45 minutes on this task sitting down in front of a computer and a notebook. You will need all of your personal information such as your social security number and date of birth. Be prepared to answer “challenge” questions from your past credit file such as, “Which Street have you never been affiliated with: Main, Cherry, Rosewood, Acacia?” These types of challenge questions are obviously there to protect you from someone else grabbing hold of your credit file.
The easiest way to freeze your credit for most is online. If you have issues you may have to resort to calling the three bureaus or even sending them a letter requesting a freeze.
The three agencies are listed below
Once you have performed the freeze with each agency– make sure you write down your login information and your personal identification code. You should make duplicates of these and store them in a safe place.
How to Lift (unfreeze) Credit Files
I have found unfreezing of my credit to be simple once my login information, password, and PIN were established. All you have to do is go back to the same sites and follow directions for lifting a freeze. The key to this is remembering where your login information is stored.
Another important note is that when you go to establish any new line of credit you will need to ask the merchant which agency they use: Transunion, Equifax, or Experian. Expect to receive some blank stares. Generally speaking unless you are buying a new car or a home, most credit checks are done with just one agency.
New is Better
In the end the ability to freeze (and lift) your credit file for free is a win-win for all of us. There are few consumers that should not seriously consider locking down their credit files.
This article was written by Scott W Johnson – the owner of Whole Vs Term Life Insurance – a site dedicated to assisting consumers in determining the optimal amount and type of life insurance. Scott is a proponent of numerus non insurance risk management solutions such as the credit freeze and lives and works in California. His agency is a certified Green Company.
