Identity theft tops the Federal Trade Commission’s list of top consumer complaints in 2010.
You often hear about economic identity theft on my show, where someone pretends to be you and opens a new line of credit using your good name. But there are all kinds of identity theft and collectively those complaints represented about 1 in 5 of all consumer complaints filed last year. In fact, the FTC received double the number of complaints about identity theft than debt collection, which was the next highest topic.
So what can you do about it? People feel so powerless and violated when they call me about identity theft. But this is a case where prevention is the best cure. I encourage you to do a credit freeze, and I’ve prepared a guide to help you through the process (see my “related links” section below). A credit freeze is not a failsafe cure all against all form of identity theft, but it will shut down cold the ability of financial identity thieves to harm you.
As you probably know, each of the 3 main credit bureaus (Equifax, Experian, TransUnion) maintains an active dossier on you that contains info about your payment history, lines of credit and more. A credit freeze allows you to seal your credit reports with each bureau. It does not affect your current use of credit in any way.
When you do a freeze, you get a personal identification number (PIN) that only you know. That added layer of security means that crooks can’t establish new credit in your name even if they are able to take over other elements of your identity — because they don’t have your secret PIN.
Then when you actually want to apply for a new line of credit, you simply use your PIN to temporarily “thaw” your files. That makes them accessible to the creditor who’s considering you as a customer.
The cost to freeze (or thaw) your credit ranges from free to $10 per bureau, depending on your state. When you multiply that by 3 credit bureaus, you could pay anywhere from nothing to $30 for a freeze. Victims of identity theft can have any fees waived, and seniors are often exempt from the fees in most states.