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Tuesday, September 29, 2015

How Credit Freezes May Help to Combat Identity Theft

If you are worried about getting hacked – and, these days, who isn’t – a credit freeze is a precautionary measure that may be worth considering.

Is a credit freeze an iron-clad, 100% guaranteed way to protect yourself from Identity Theft? Unfortunately, no. Think of credit “freezing” as an increased measure of security. While the term “credit freeze” may bring up some negative connotations in your mind, a credit freeze is actually a positive move you can make to reduce the chances of identity theft.

 The cost is minimal – and now many of us have the option. Years ago, only victims of hackers could request credit freezes. In 2007, that changed. In that year, the three consumer credit bureaus all decided to let consumers request freezes. The fee is nominal – typically $20 or less. Compare that with a credit monitoring service, which can run you over $100 yearly.

How does a credit freeze work? The person wishing to, in essence, seal their credit history would go online and contact one of the three credit bureaus - Equifax, TransUnion or Experian – to request a freeze. The credit bureau would then issue a PIN for purposes of accessing those “frozen” credit reports. So, if a thief wanted to exploit that credit and/or credit history, he or she wouldn’t be able to - without the PIN.

If you need to apply for a loan or a job, you can “thaw” your frozen credit history using your PIN. There is also a fee to thaw your credit, typically about $10 per bureau. Paying that fee may allow you a one-time thaw or a thaw for a specified time period.

Why doesn’t everyone do this? Some people don’t realize they have the option. Others have considered it, but they would rather not put up with a couple of factors. If you constantly open new credit accounts or if your credit history is checked frequently, it is irritating to pay a thaw fee again and again. Then there’s the wait: thawing your credit usually takes a few days.

It is important to recognize that a credit freeze will not keep everyone out of your credit history – it is only as secret as your PIN. Not only that, businesses that have an existing relationship with you can still look inside your credit reports. A freeze is also not a remedy for ID theft – if theft is already occurring in one of your credit accounts, a freeze won’t stop it. A freeze must be requested before the crime is committed.

Should YOU freeze your credit?
The older you are, the more merit the idea may have. Credit freezes are also sometimes requested by divorcing couples when trust is in short supply between ex-spouses. You may want to freeze your credit whether you have been hit by ID theft or not – it may end up saving you money and stress someday. 


Posted by: Patrick Carroll at 9:30 AM
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This material is intended for historical purposes and may be outdated. Its contents should not be relied upon as current information. For more up-to-date information regarding these topics, contact your financial professional.







All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through ACI Partners, LLC. ACI Partners, LLC is not affiliated with Triad Advisors.