Sunday, June 3, 2012

Security Freeze on Your Credit Report

In addition to putting a Credit Fraud Alert on your credit report, you can also add a Security Freeze.  Is this worthwhile doing?


As I noted in an earlier posting, you can put a Credit Fraud Alert on your credit report, for free.   It lasts for 90 days, although it can be renewed.   Some folks argue that it is not very effective, as the folks who give out credit, too readily, to fraudsters, just look at the credit score (or indeed, a computer looks at it) and not much else.  If a crook has your Social Security Number and Name, chances are, they can take out credit in your name.  It ain't hard to do.

If you have been the victim of "identity theft" which includes having your credit card number stolen, you can get something called a Security Freeze added to your report.   This puts lenders on notice not to give credit to anyone, without getting your written permission confirming you are who you say you are.   They also will do this for a fee of $3.  If you want the "free" Security Freeze, you have to include a copy of the Police report and then mail it in and wait.   Most people probably just pay the $3.

How does it work, well, this except from the Experion site explains it pretty concisely.

Security Freeze

Security freezes are designed to prevent a credit reporting company from releasing your credit report without your consent. However, you should be aware that using a security freeze to take control over who is allowed access to the personal and financial information in your file may delay, interfere with or prohibit the timely approval of any subsequent request or application you make regarding a new loan, credit, mortgage, insurance, government services or payments, rental housing, employment, investment, license, cellular telephone, utilities, digital signature, Internet credit card transaction or other services, including an extension of credit at point of sale.
When you place a security freeze on your file, you will be provided a personal identification number or password to use if you choose to remove the security freeze from your file or authorize the temporary release of your credit report for a specific person or period after the security freeze is in place. To provide that authorization, you must contact the reporting agency and provide all the following:
  1. Sufficient identification to verify your identity.
  2. Your personal identification number or password provided by the credit reporting company.
  3. A statement that you choose to remove the security freeze from your file or that you authorize the reporting agency to temporarily release your consumer report. If you authorize the temporary release of your consumer report, you must name the person who is to receive your consumer report or the period for which your consumer report must be available.
A security freeze generally does not apply to circumstances in which you have an existing account relationship and a copy of your report is requested by your existing creditor or its agents or affiliates for certain types of account review, collection, fraud control or similar activities.
If you are actively seeking credit, you should understand that the procedures involved in lifting a security freeze may slow your own applications for credit. You should plan ahead and lift a freeze, either completely if you are shopping around, or specifically for a certain creditor, a few days before actually applying for new credit.
So, you can see, if you are the kind of person who is applying for a mortgage, car loan, student loan, or credit card, such a freeze can be a pain in the ass.   On the other hand, if you are like me, debt-free, it is not such a big deal.

And a lot of people, who use credit a lot, end up getting paranoid and putting a security freeze on their account, paying to do this, and then paying to have it taken off again.


To temporarily remove a security freeze for a period of time in order to apply for credit or for any transaction that requires that another party access your personal credit report, you may log on to www.experian.com/freeze or call 1 888 EXPERIAN (1 888 397 3742), then enter your identification information and personal identification number. The fee for temporarily removing a security freeze is $3. There is no fee for victims of identity theft who provide a valid copy of an identity theft report filed with a law enforcement agency or for consumers 65 years of age or older. To temporarily remove a security freeze for a specific party, you must provide your personal identification number to the party you wish to grant access to your report.

To permanently remove a security freeze, log on to www.experian.com/freeze or call 1 888 EXPERIAN (1 888 397 3742). You also may send the request to: Experian Security Freeze, P.O. Box 9554, Allen, TX 75013 and include all of the identification information listed above. You also must include your personal identification number. The fee for permanently removing a security freeze is $3. There is no fee for victims of identity theft who provide a valid copy of an identity theft report filed with a law enforcement agency or for consumers 65 years of age or older.

So, that's the irony of it all.   If you need credit (and you have to ask yourself if you really do) putting a freeze on your credit could cost you $3 each time - to put it on, and to take it off, temporarily or permanently.

If you don't need credit, you really don't need a security freeze, I suppose, other than to avoid the hassle of someone trying to open up credit lines without your permission.

Be sure to write down the PIN number, or it could be hard to remove the freeze.

They make it a hassle, probably because they would rather you sign up for a subscription-style "credit monitoring service" that they can charge you for, again and again, month after month, for the rest of your life.

A better approach is always to not obsess about your credit score, or obsess about the ability to borrow money.   Debt-free is the way to be!

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