What is a Credit Freeze?

Credit freezes became available to everyone in all 50 states on November 1, 2007. Until that time, you couldn't get them in most state unless you were a victim of identity theft.

A credit freeze allows you to completely restrict access to your credit report. If you place a freeze on your report, potential creditors and certain other people or businesses can’t get access to it unless you lift the freeze temporarily or permanently.

This restriction applies to you as well. You cannot get any kind of new credit until you 'thaw' your credit at all three credit reporting agencies - Experian, Equifax and TransUnion.

A credit freeze does not:

• affect your credit score
• keep you from getting your free annual credit report
• keep you from buying your credit report or score
• affect you when applying for a job
• affect you when renting an apartment
• affect buying insurance

A credit freeze isn't free like a fraud alert. It costs $10 per credit bureau in most states to freeze and another $10 per credit bureau to lift the freeze or 'thaw' it. To refreeze, it's another $10. This comes to $30 each time you want to make changes. The cost depends on what state you live in - some states have mandated a lower rate.

This is a very effective way to keep anyone from opening a fraudulent account in your name. It's not for everyone though because you can't apply for new credit yourself without thawing. It also can take up to a couple of weeks for the process to complete.

Go here for more info on how to place a credit freeze.

What is a Fraud Alert?

Fraud alerts are somewhat new on the credit scene. They were created by the federal Fair Credit Reporting Act (FCRA) as a way to help us protect ourselves from identity theft.

Who needs a fraud alert?

All of us do. Because of security breaches and stolen or lost data, anyone is vulnerable to identity theft at any time. They are a big factor in any identity theft protection plan.

A fraud alert is a signal placed in your credit report or credit file to warn potential creditors that they must use what the law calls “reasonable policies and procedures” to verify your identity before they issue credit in your name. Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts.

There are three kinds of free fraud alerts: initial, extended and active duty.

An initial fraud alert is good for 90 days and can be renewed. To place an initial fraud alert, call the toll-free fraud number of any one of the three national consumer reporting companies. The company you call is required to contact the other two. Then they will place an alert on your report they have on file. You will receive a confirmation from each of the companies to let you know it has been done. You'll also see your contact phone number a new creditor will call you at.

Equifax: 1-800-525-6285

Experian: 1-888-EXPERIAN (397-3742)

TransUnion: 1-800-680-7289

When you place an initial fraud alert on your credit report, you’re entitled to order one free credit report from each of the consumer reporting companies; if you ask, only the last four digits of your Social Security number will appear on your reports.

If you have been a victim of identity theft, you may ask for an extended alert, which stays on your credit report for seven years.

To get an extended fraud alert placed on your report, you will need to contact one of the credit bureaus and provide an Identity Theft Report, such as a police report or other report to a law enforcement agency, including a report to the FTC.

If your credit report has an extended alert, potential creditors must contact you in person, or by phone or some other method you have provided before they can issue credit in your name.

When you place an extended alert on your credit report, you’re entitled to two free credit reports from each of the consumer reporting companies within 12 months. In addition, the consumer reporting companies must remove your name from marketing lists for pre-screened offers of credit for five years — unless you ask them to put your name back on the list.

An active duty fraud alert is for active duty military personnel that will last for 12 months. As with the other types of alerts, it requests a new creditor to call you at the number you provide to verify your identity before opening a new account. If you file an active duty alert, you'll also be opted-out of pre-screened credit offers for two years.

How to Report Identity Theft

If you are a victim of identity theft, you need to take steps immediately to control the damage.

Here's what to do:

• Review your credit reports and make note of the fraudulent accounts. Get them free at http://annualcreditreport.com.
  
• Contact the Fraud Department of the three credit bureaus and report it.
• Place a Fraud Alert on your credit files. With a fraud alert, new creditors are asked to call you prior to opening a new account or changing one.
• File a complaint with the FTC - 1-877-IDTHEFT (or 1-877-438-4338) or online at https://rn.ftc.gov/pls/dod/widtpubl$.startup?Z_ORG_CODE=PU03
• Print out the online FTC Complaint Report and include it with your police report.
• File a Police Report with your local police department. Ask them if you can file the report in person. If you cannot, ask if you can file a report over the Internet or telephone.
• Print out the FTC's Police Report Cover Letter and include it with your police report.
• Get a copy of your Police Report that includes the FTC Complaint Report you provided.
  
• Contact the fraud department at each of your creditors and report the incident. Call each creditor even if the account you have with them hasn't been tampered with.
• Close any accounts that were compromised.
• Send a copy of your Police Report to each of your creditors.
• Contact your bank and report the theft to them.
• If your passport was stolen, contact your local Department of State field office.
• Verify your earnings with the Social Security Administration - 1-800-772-1213 or http://www.ssa.gov.
  
• Keep detailed records on all calls, correspondence. Include names of people you spoke to, dates, times and what they said.

You will have to do a lot of follow-up on this. It's very time consuming and can continue to plague you for years.

Strong Passwords Help Prevent Identity Theft

Are you guilty of using your dog's name for a password?

Or worse yet, the word 'password' for your password? If you are, you're not alone. I have a friend who uses her dog's name for all her passwords and thinks it's her super-secret one because that dog died some years ago. Problem is, it's a rather common word found in every dictionary and easily deciphered by any half-witted hack.

Your password is vitally important to your security. If an identity thief gets the password to your credit card account or bank account, he can wipe you out with a click of a button.

So you need an easy way to remember strong passwords.

Random numbers and letters are the best choice. Mix them up and be sure to use capital letters as well as lower-case ones.

Hey, that doesn't sound so easy to remember, a bunch of random letters and numbers.... until you have a method to the randomness.

Choose a line from a song you like or a poem or a movie. Or just simply make up a sentence that you'll remember. Something like: Strong passwords deter Identity Theft = SpdIT. Now put a few of your favorite numbers in front and at the end to get this: 42SpdIT966.

Now you've got a good password that's impossible to just guess and very difficult to crack. Wasn't that easy?

Do You Need Identity Theft Protection?

Identity theft used to be somewhat rare.. but that was 20+ years ago. Now that we're at the end of the first decade of the 21st Century, identity theft has taken off as THE crime. Unfortunately, most people still believe they're safe from it and don't even think about using any kind of identity theft protection.

The main factor that's fueling the increase in id theft is the instant financial transactions we've come to expect from stores, banks, ATM machines, and credit cards. Modernized society has mostly gone paperless and conducts it's financial business in a virtual world. The need for speed in these transactions is what identity thieves count on to conduct their business and make their fortunes.

Instant credit and fast transactions have become the norm. We tend to feel very inconvenienced if there's any type of slowdown. To increase the speed, banks and credit card companies like Visa and Mastercard have developed procedures that make every attempt to be completely secure but still have flaws. It's these small flaws that open opportunities for hackers to gain access to millions of identities.

All over the world are creative, smart and talented people with tons of programming ability. They may not have employment opportunities in their countries and turn to hacking as a way to make a living. The internet has made the entire world one huge global community - no one has to actually commit this crime in person. The odds of getting caught are slim and even slimmer to actually be convicted of identity theft.

Dumpster diving is still a tried and true way to steal identities. The 'divers' aren't randomly poking around in just any old dumpster. They've targeted the ones outside of business that deal with financial information such as cell phone stores, mortgage lenders, call centers, colleges and more. If you think companies shred information before throwing it away, you're wrong. A dumpster can be a treasure-trove of information.

Thieves will also steal laptop computers and/or hard drives with sensitive information in them. Here's an example of a recent theft on March 29, 2008 from the Department of Human Resources in Atlanta, GA as reported by PrivacyRights.org:

A thief has stolen computer records containing identifying information on current and former employees of the state Department of Human Resources, including names, Social Security numbers, birth dates and home contact information. An external hard drive that stored a database was removed by an unauthorized person. An Unknown number of identities were stolen.

Or how about this one on April 4, 2008 affecting 60,000 members of the Harley Davidson 'HOG' Club:

A laptop computer containing certain HOG members' personal information was determined to be missing from their facilities. The personal information stored on the computer included names, addresses, credit card numbers, their expiration dates, and driver's license numbers.

Yes, you do need identity theft protection. You can do it yourself or you can choose one of the many excellent companies that will protect you for a small price. Don't be caught with your identity exposed - get protected!

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