Protect Your Credit – Implement a Security Freeze Now!

In Asset Allocation, Personal Finance, Personal Financial Planning by Chip Hymiller

Equifax, one of the three major credit agencies, recently revealed that they had a major security breach whereby 143 million American’s personal information (including Social Security numbers) was stolen.  Click here and choose the “Potential Impact” button to find out if your personal information may have been compromised in this breach.

**We do not recommend that you enroll in the Equifax “TrustedID Premier” product.  This is a service that is not necessary and eventually will cost you money (the first year is free for those impacted by the breach).

Instead, we would strongly suggest that you consider establishing a security freeze on your record with each of the three credit agencies – Equifax, Transunion and Experian.

Placing a security freeze on your credit with each agency is the only way to prevent someone from obtaining credit in your name without your consent.  Here are links to each credit reporting agency that will facilitate a security freeze:

Understand the Drawbacks of a Security Freeze

While implementing a security freeze on your credit is a great way to prevent new credit from being extended in your name, you need to understand that there drawbacks.

A security freeze does not protect you against someone stealing and using your existing “open” credit or revolving lines of credit.  You will still need to monitor all open lines of credit.  These would include active credit cards, as well as dormant credit cards (or lines of credit) that you haven’t used in a while – and may have forgotten about.  We would suggest that you identify all of your sources of credit by obtaining a credit report at www.annualcreditreport.com  Residents of many states, including NC, are allowed to obtain a free copy of their credit report from each of the three credit reporting agencies once every 12 months.  Once you identify all of your open credit lines, you may want to close those that you don’t use (or didn’t even know was open).  Normally, the contact information to these credit providers are listed in your credit report.

A security freeze can be inconvenient at times.  Having a security freeze on your credit can delay certain legitimate credit providers access to your credit report.  Cell phone, internet, mortgage providers, etc. all perform credit checks before extending their service, or offering you an account. These vendors will all be unable to see your credit report unless you actually “lift” the security freeze on your credit.

While the process of lifting the security freeze is fairly painless, it does require some advanced planning on your part.  You will need to check with the service provider, prior to applying for an account, to determine which of the three credit reporting agencies they utilize to check your credit.  When you know this, you can then contact that credit reporting agency to temporarily lift the security freeze on your account.  You can lift the freeze for a specific vendor (i.e. Verizon, Wells Fargo, etc.), or you can simply lift it for a certain amount of time (5 days).

Having a security freeze on you credit requires some organization.  Because of the very sensitive nature of your credit, you need to be organized.  You will need to maintain a very secure folder that lists all of the details of your security freeze.  You will receive contact numbers and PINs from each credit agency. These numbers will enable you to lift, or suspend your security freeze.  You cannot lose, or misplace these important numbers.

These slight inconveniences are small price to pay to ensure that you maintain control of your own credit.

There are many resources available to those who would like to learn more about identity theft prevention.  Here are a few to check out: