How Can I Freeze My Credit to Prevent Credit Fraud?

Credit fraud and identity theft are two of the fastest growing crimes in the world today, according to USAToday.com. While both of these crimes affect your bottom line, they take different routes to that end. The difference lies in whether the information stolen is to be used to charge illegal purchases on an existing card or if personally identifiable information will be used to open new credit in the victim's name.

Credit History Protection

Placing a freeze on your credit report prevents creditors, employers and others from accessing your credit history. Identity theft occurs when someone uses your personally identifiable information (e.g., Social Security number, name, address, etc.) to open new credit. Because your information was used, the unpaid bills are reported to your record at the major credit bureaus, affecting your score. Once the information is there, you have the burden of proof to have it removed. This can be a costly and long process.

According to Kiplinger.com, placing a freeze with the bureaus is a good strategy if you have reason to believe your information has been compromised. Most states impose a small fee to have this done, usually around $10. The freeze can limit your ability to get quick credit approval, but the information is safe. Each bureau will provide you with a personal identification number (PIN) that allows you to temporarily lift the freeze when you want to apply for credit. You can check FTC.gov to see if your state has passed laws yet providing for free credit freezes.

To place a freeze online, visit the sites for each major credit bureau and fill out the forms. See Resources for links directly to their freeze pages. If your state requires a fee, you can pay this with your credit or debit card. If you prefer to request the freeze through the mail, write each bureau individually at the following addresses and include a check for your payment. You will need to send copies of personally identifying information such as Social Security card, driver's license and a recent utility bill with your name and address.

Experian
P.O. Box 9554
Allen, TX 75013

TransUnion
P.O. Box 390
Springfield, PA 19064

Equifax
P.O. Box 740256
Atlanta, GA 30374

If you feel a freeze would be too drastic a measure for you, you can place an initial credit alert instead. This is free at all three bureaus and in all 50 states. The alert lasts 90 days, but it can be renewed any time you feel it's necessary. An initial alert is easy to place. Simply call one of the bureau's automated numbers and follow the prompts. This action prompts that bureau to alert the other two. The alert goes on your report immediately, so that when a lender pulls the report, it is notified that it must either call you for verification or get extra identification to ensure you are indeed the report owner.