The #1 Question of 2015

The #1 Question of 2015

By Roger Bair

By Roger Bair

Every year a hot topic surfaces in the world of personal finance. In 2015, “How do I protect my identity?” has been at the top of the list. The answer normally involves paying for a monthly service to monitor credit and identity. And while we might not try to talk a client out of a monthly service, we would recommend considering a Security Freeze, as well.

Monthly service providers monitor credit and other identity theft issues related to your driver’s license, banking, brokerage accounts and Social Security data. In addition, monthly service providers promise cash and assistance if your identity is stolen, and some offer unique services such as quarterly reports, credit scores and anti-hacking computer software. A Security Freeze, however, is a service provided by the three Credit Bureaus in which you withhold permission for the Credit Bureaus to provide your credit report, thus removing a major avenue of identity theft. The Security Freeze prevents someone from opening an account in your name since financial institutions routinely request a credit report when you open an account. The Security Freeze also prevents malicious requests for your credit report to gain access to the treasure trove of information that the report contains about you.

When you establish credit, the Creditor receives information and scores from one or all of the three Credit Bureaus. And, while Credit Bureaus are accessible by any financial institution at any time, the Credit Bureau takes no responsibility for ensuring whether the person filing for credit is you or not. As a result, if the information obtained on your credit report is within the Creditor’s applicable approval range, then the applicant can establish credit in your name, even if you are not the applicant. A Security Freeze protects you from this danger of false identity use. As part of the freeze, Credit Bureaus place a PIN authorization on your credit files. Without this PIN number, not only can no one receive the credit information, no Creditor will establish new credit in your name, either to an identity thief or to you, for that matter.

The cost of a Security Freeze varies by state but is generally very low ($10 per Credit Bureau per person or single $30/married $60 for all three in Pennsylvania and $5 per Credit Bureau per person in Maryland), especially when you consider how powerful a tool the Security Freeze can be. To establish a Security Freeze, visit the following webpages.

https://www.freeze.equifax.com/Freeze/
www.experian.com/freeze
https://annualcreditreport.transunion.com/fa/securityFreeze/landing

If you decide to implement a Security Freeze, remember that once frozen, you will need to thaw your credit file each time you seek a loan, apply for a credit card, sign up for a monthly service, or even apply for auto insurance (believe it or not, auto insurers use credit records to develop driving risk assessment profiles). So if you do need to provide someone access to your credit file after a Security Freeze has been established, you merely go to the same websites listed above with your PIN and implement a short thaw window for the creditor to view your records.

A Security Freeze may be a nuisance if you open loans, apply for store credit cards to earn discounts, or switch cell phone carriers frequently. However, if you seldom borrow, a freeze can be a great protective measure. So, in response to, “How do I protect my identity?” consider a Security Freeze; it’s a simple, cost-effective method of building a moat around your Credit Bureau information.