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.
It's not thieves or breaches or some mysterious unsolvable problem;directly caused the ID Theft epidemic by positioning themselves as the gateway to all credit decisions and then freely handing out your information with insufficient controls.
I already explained the various types of non-credit ID Theft, but the vast majority of instances do involve a credit check which simplifies the problem: block the check, block the theft. I won't bore you with the long and bitter war with the CRCs with us trying to get freezes available and them trying to block laws and discourage people from using them. Bottom line, since 2018, freezes are free in all US states.
Here's why you should care:
Freezing Your Credit Reports
- Go to the three CRC's freeze pages online (they keep changing the URLs so check the FTC's page for an up-to-date list or register a complaint while you're there if they changed them again).
- Enter your data, but NOT your credit card or other payment information.
- Watch out for upsells and addons as they trying to use the freeze system to milk you for monitoring or other "services".
- Make sure you have a freeze PIN or they notify you it's coming in the mail (but make sure you actually GET it).
Boom, you win.
What's the big deal? It used to be I only needed a little bit of your information to pretend to be you and get credit, but with a Freeze PIN in place, now there's an extra piece of required data... something only YOU and the CRC have. If you're doing it right, you'll store the PIN securely and NEVER allow any store or creditor to "thaw your credit for you if you just give them the PIN". Instead, do the following:
Thawing Your Report
- Contact the CRC by phone or through their website.
- Provide the freeze PIN along with a date range
Once complete, access to your credit report is open for the time period you specified. Granted, this means you're totally exposed during that time, but it's still a small window of time for thieves and is the most effective way to handle several different companies need access to your credit report at once (like if you're going loan shopping or moving into a new place and need to let several people check your credit in sequence).
- 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.
When you 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 to thaw more than you need to.
There is only one drawback that I know of: 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. Similarly, if you have a pressing need to get credit (car broke down or something) delays can be a problem. The CRCs are supposed to unfreeze your credit within an hour of making the request online, but I've had some trouble getting them to approve the thaw this way due to (in my opinion) shenanigans (thanks Equifax... you scumbags).
The CRCs are supposed to make thaws easy. If you think they're making it harder than it should be (purposefully or incompetently), file a complaint at the Consumer Financial Protection Bureau.
- You get to control who sees your credit report. Outside of a small set of exceptions credit report access will be blocked until and unless you proactively unlock it first.
- In some (all?) cases, attempts to access your frozen credit will generate email or mail alerts. So much for paying for monitoring.
- Having a little cool-down time to rethink getting into more debt isn't such a bad thing.
- They do not affect any existing credit accounts or credit cards in any way (only NEW credit applications that require a credit check). In fact, there are robust protection laws to keep you safe when using credit cards. This is unrelated to freezes, but still cool so check it out!
Still, this is balanced by the incredible protection of actually having control over who sees your credit.having a little time to actually think before adding to your debt really can't be such a bad thing.
Ready to get your money's worth?
Freeze your credit reports!
Do it. Do it now. It's free as of 2018 and it actually helps to prevent ID theft. (this link goes to the FTC article on freezes and links to each of the three websites and gives phone numbers in case the websites aren't working for some reason).
Each company will try to steer you into some kind of monitoring, credit score, or service plan that will allow them to keep making money on you. Make sure you don't fall for it. You should be able to get through the whole process without pulling out your credit card. If not, you probably took a wrong turn somewhere, so go back and try again.
Now, if you are currently paying for some kind of monitoring or protection service, take your notes from the exercises in the previous lessons and go down the list of "features" for your service. As yourself whether the "feature" still makes sense now that you have freeze in place. Let me help you get started:
- How many people do you know who were victims of ID Theft? How many of those were NON-credit ID theft?
- If your experience matches mine and you've rarely heard of anyone who suffered ID theft that didn't require a credit report, ask yourself: what are my odds of ID theft really now that my credit reports are properly locked?
- If your risk has been significantly reduced, does paying $10, $20, or more a month for insurance or monitoring still make sense?
And so on... Bottom line, you have to make your own decisions and determine if you're happy with what you pay for what you get. But even if you decide to keep paying, the freeze made you more secure today than you were yesterday so your final exercise for this section:
Send this link to at least one other person, but preferably everyone you know: https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs#place. Tell them that it's a free and legally-mandated right to protect your credit reports the way we should have been able to from the beginning.
Course Guide for: Goodbye Identity Theft
It's common to say "I have nothing to hide" when in reality, that's a dangerous belief. It's important to understand that information equals threat and you'll be far safer, not just from ID Theft, but many other kinds of threats by changing your mindset about privacy and data protection.