Can I Freeze My Credit Report?
Due to the high number of identity theft victims each year, many states have passed legislation allowing consumers to freeze their credit reports. When a consumer freezes his or her credit report, it makes it impossible for a lender to approve a credit application since it denies access to consumers credit reports. Thus, a credit freeze stops a thief from obtaining credit cards and loans in someone else's name.
As of March 2006, only eleven states: California, Colorado, Connecticut, Illinois, Louisiana, Maine, Nevada, New Jersey, Texas, Vermont and Washington allow consumers to freeze their credit reports. [Texas, Vermont, and Washington residents must be prove that they are victims of identity theft before they can freeze their credit reports.] Many other states, at least 21, are considering legislation that would allow consumers to freeze their credit reports.
Why haven't more states passed legislation allowing consumers to freeze their credit reports? It is because lenders and the three credit reporting agencies are against such legislation because it negatively affects their profit and will fight such legislation wherever they can. For example, lenders in Utah succeeded in defeating a credit freeze bill in that state.
Department stores and major retailers want to encourage consumers to sign up for an in-store credit card -- "instant credit" it's called. Auto dealers want to sell you a new car today and they want you to obtain financing on the spot. If your credit report is frozen, this means they can't immediately give you credit or approve your auto loan and it will take several days for you to unfreeze your credit report.
The three major credit reporting agencies -- Experian, Equifax and TransUnion -- make a substantial amount of their profit selling your information to third parties. If your credit report is frozen, they can't sell your information. It affects their profit margin in a negative way, so they oppose such legislation.
Freezing your credit report isn't free. The fee can run you about $30. There is also a small fee to unfreeze your credit report. To freeze your credit report, you must contact each of the three credit bureaus. You will be assigned a pin number that will enable you to unfreeze your account when you do apply for credit.
Who should freeze their credit reports? A person who is well-established, who already has a mortgage, new car and all the credit cards they need is a good candidate for a credit freeze. In addition, those who are at high risk for identity theft should also freeze their credit reports.
If you live in a state that does not offer credit freezes, contact your state representatives and ask them to pass such legislation.
