Credit card owners are soon to get a new tool to help fight fraud. On November 1, credit monitoring behemoth Experian, says it will give consumers the option to freeze their credit report.
Credit report freezing is one way of preventing financial identify theft should personal financial information fall into the hands of an undesirable third party. A freeze prevents your credit history from being accessed by a potential creditor. If a creditor cannot access a credit history than there is a very good chance you or anyone pretending to be you will not be given a loan or a line of credit.
A freeze doesn't guarantee someone cannot acquire credit under your name, however Experain says it is an affordable and quick way for consumers to take action to prevent identity theft in a worst case scenario.
The Federal Trade Commission, which provides a wealth of consumer guidance on credit freezing, agrees with Experain, yet cautions: A credit freeze may prevent an identity thief from opening a new account in someone's name, it will not protect the victim from a thief who is using their existing credit cards. Additionally, if the theft is ongoing when you place a credit freeze, the freeze itself won't prevent the crime. That said, the FTC does see credit freezing as effective against the "vast majority" of identify thefts that entail opening new credit accounts.
For victims of identify theft, Experian's file freeze option will be free of charge. Others who simply want to freeze access to their credit history will be subject to a $10 fee to place or lift a freeze. Some states mandate a specific price for placing and removing freezes.
Thirty-nine states currently have security freeze laws. California charges $12 per freeze for one specific creditor, according to the Consumers Union. Massachusetts and New Jersey have a flat $5 for all freeze placements and lifts.
Residents in eleven states lack freeze laws (Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia).
Experian isn't the first national credit bureau out of the gate to give all 50 states the file freezing option. In September, TransUnion announced it would offer the solution starting October 15, citing how some state-enacted laws were yet to take effect as other states lacked credit freeze laws altogether. TransUnion says it will also offer the service to theft victims for free while charging non-victims a $10 fee.
Identity theft was the top fraud complaint amongst consumers, accounting for over 37 percent of the over 686,000 complaints filed, according to a 2005 Federal Trade Commission report.
