Watch this video or read the article below!
Scenario: A drug dealer gets a cellphone to make drug deals. They sign a lease in your name, hook up electricity, and then go shopping for supplies all in your name. What do all of these have in common? Each of these requires a credit check.
A credit check for the phone, a credit check for the lease, another for the utilities, and the last for the store's credit account. The real problem with identity theft isn't the thieves (who have always been there), it's the system that makes it so easy for them to get goods and services while leaving you with the bill. How does this happen!?
Credit checks are done at one of the three major credit reporting companies (which some people call credit reporting agencies or bureaus, but I'll call CRCs for short). Because their business is about collecting and reselling your personal credit information, they hardly have any motivation to be careful with who they grant your data to. Similarly, salespeople and sales managers who are under constant pressure to meet their "numbers" for profit, services, and such also have very little motivation to look too closely at a "high margin" sale.
In the end, it's up to you to protect your credit. Fortunately, it's pretty easy.
The real problem here is how quickly and easily a CRC will hand over your data which a retailer will then use to ring up debt in your name (a serious problem when the person in the store isn't you). By blocking the ability of a CRC to sell your data, you eliminate the bulk of credit-based ID theft (there are types of ID theft that don't involve credit, but they're more rare and we'll cover them next).
Fortunately, there was a movement to pass laws in the various states allowing you to do just that. In 2007 when enough states had already passed laws, the three CRCs "voluntarily" allowed people in every state to freeze their reports (at worse terms than most states mandated).
Freezing Random Access to Your Credit Reports
Go to the three CRC's freeze pages online
- Enter your data including which state you live in
- Pay a freeze fee (which varies by state, but is waived for prior ID-theft victims)
- Wait for your freeze PIN in the mail.
That's essentially it. Once you've followed the directions, you should receive a letter in the mail which provides a long number (a freeze PIN) that you'll need in the future to "thaw" your credit report for the people you actually want to allow access. In all other cases, any new credit inquiries will be blocked (this won't affect people you already have a credit relationship with like current credit cards and accounts).
Thawing Your Report
A "thaw" is when you open access to your report for someone. Better states mandate your right to thaw in the following two ways:
- Contact the CRC by phone or through their website.
- Provide the freeze PIN along with a date range
- Pay a fee for the thaw (varies by state, but is free for prior ID theft victims).
Once complete, access to your credit report is open for the time period you specified. This is most useful when several different companies need access to your credit report at once.
- Contact the CRC by phone or through their website.
- Provide the freeze PIN along with the name of a company.
- Note the temporary PIN they provide you.
- Give the temporary PIN to the company that you're applying for credit with.
It's pretty straightforward, but you have to remember two things. First, NEVER give your freeze PIN to anyone except the CRC themselves. For this to work, you must be the only one who has the PIN.
Second, when you go to apply for something that requires a credit check, ask them which CRC they use so you can thaw the right one. There's no sense taking the time and trouble (not to mention the cost) to thaw more than you need to.
Having a credit freeze will naturally introduce a delay when getting credit. If you are the type to apply for instant-credit deals, you might find this to be cumbersome. Keep in mind that having a little time to actually think for a few extra minutes (up to a day or more) before adding to your debt really can't be such a bad thing.
Freezing is cheap, but thawing has a per-use cost. If you do that enough times in a year, it can add up. However, how many times per year do you actually apply for brand new credit? Credit cards, store accounts, change of cell phone or TV service. Even if you did check your credit a lot in a single year, you can lower the cost by doing a time-based thaw and planning for several checks in the same time period.
Besides; if you filed a police report or a FTC complaint of identity theft in the past, you can provide that to the CRCs to have your freeze and thaws for free for life!
So Do It!
Sadly, credit-based ID theft is not the only kind there is. While the others are more rare, they can be far more devastating. Next, learn how to defend your non-credit data as much as is possible.
|If you've already become a victim,.|
Solving ID Theft
|Lock your credit reports with ato prevent credit-based ID theft (90% of ID theft risk).|
|Learn toto prevent not only ID theft, but many other kinds of problems (the rest of ID theft risk).|
Save Time and Money
Who is Responsible?
|Sometimes you just have to wonder why it's so easy to steal identities in the first place.|