In the wake of the massive security breaches at Target and Neiman Marcus, consumers are scrambling to keep their credit and debit card information safe from identity theft.
One overlooked but extremely potent form of protection that some consumers may want to consider is a credit report security freeze.
A security freeze, writes New York Times columnist Ron Lieber, is a hold you can place on your credit report that prevents credit bureaus from releasing your information to any company or other entity that doesn’t already have a relationship with you. Because most credit-card issuers, mobile phone providers, and loan officers won’t lend without first checking your report, a freeze greatly reduces the chance that a new account will be made in your name without your knowledge.
For consumers worried about the increasing vulnerability of their personal information, a security freeze may seem like a no-brainer, but it’s not right for everyone. Senior director at Visa Jason Alderman notes that if you’re planning any purchase that requires a credit check (renting an apartment, securing a mortgage, buying a car, etc.), the inconvenience may not be worth the added protection.
To freeze your credit reports, you must contact each of the three credit bureaus individually at the following sites: Equifax, Experian and TransUnion. You’ll need to supply your name, address, date of birth, Social Security number and other personal information. Fees and filing requirements vary according to state law. This Equifax site provides a good overview.
Unfreezing the reports can also come with a fee and can take up to five business days to process. But as Lieber notes, the fees are actually pretty small (between $US5 and $US10 per transaction depending on your state, often less for seniors), and so long as you plan accordingly, the few days it takes to unfreeze your accounts shouldn’t affect your purchases.
A credit report freeze is a smart idea for older Americans in particular. Seniors are especially vulnerable to ID theft and scams, and have a harder time recovering financially than younger victims. Given the increasing rates of credit card theft among national retailers, Lieber argues that the advantages of freezing credit reports vastly outweigh the minor inconveniences:
In practice most people, especially older ones who already have all the credit cards and mortgage loans they need, don’t have cause to give new creditors access to their files more than once or twice a year, if that… [S]ecurity freezes are one of the best tools consumers have to protect themselves from identity theft.
One important thing to note, says Alderman: While security freezes can block the creation of new credit accounts, they can’t prevent an identity thief from making charges to existing accounts, so be sure to continue monitoring all bank, credit card, and insurance statements for fraudulent transactions.
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