How to Prevent New Account Fraud

In this post we’ll flesh out how to protect yourself from New Account Fraud

In a previous post we discussed What is New Account Fraud. In this post we’ll flesh out how to protect yourself from New Account Fraud

Fraud Alerts

Fraud alerts are a “flag” on your credit alerting creditors that they should double-check the identity of a credit applicant, generally via telephone before granting credit. You can place a 90-day alert on your credit files with the three credit bureaus.

Once applied for at one bureau, they will notify the other 2 of the alert. This extra layer of protection, however, is temporary at best and doesn’t require the credit to make the call to verify the identity; it’s a mere suggestion.

Equifax: 1-888-766-0008

Experian 1-888-397-3742

TransUnion 1-800-680-7289

Credit Freezes

When you place a freeze on your credit files, your credit is locked down and nobody in the business of issuing credit can check your scores to see what your risk level is. Rules on freezes vary by state, but it is a typically easy process to get a credit freeze. Go to each of the 3 credit bureaus, locate their search tool and search “security freeze” or “credit freeze”A credit freeze is priced from free to approximately $15 per credit bureau. Similar costs are involved when “thawing” (i.e., unlocking) a freeze.

A credit freeze locks down your credit report so lenders can’t see your scores, making your credit/SSN useless to them because they don’t know their risk level.

If thieves get ahold of your ID, they can’t get credit in your name as long as your credit is frozen. Freezing your credit will seal your credit reports. You’ll need a PIN to access your credit to allow valid services to check your credit when needed. Freezing won’t affect existing credit lines and are free to victims of ID theft.

Since 2008, the three big credit bureaus have allowed non-victims to freeze their credit for a small charge.

When is a credit freeze a good idea?

For anyone 18 and over who has a credit report and those under 18 whose identity is stolen and for whom a report is then generated by default.

What should I consider before ordering a credit freeze?

Nothing. Just do it. Credit should be frozen across the board, but banks/retailers/lenders have spent millions lobbying to prevent that, as it would eliminate instant credit, and these institutions say that it would “gum up” the system of lending.

What are the costs?

Free to $15.00 per credit bureau for life, depending on the deal your state attorney general made with the bureau back in 2008. Then free to $5.00 to thaw it each time you apply for new lines of credit.

Inconvenience: It requires planning large financial decisions and being responsible. So horrible. Otherwise it takes five minutes per bureau to temporarily thaw your credit prior to financing a new line of credit at an auto dealer, mobile phone provider, etc.

Can a credit freeze hurt your credit score?

No.

How does a credit freeze differ from a fraud alert?

Fraud alerts are only 90 days, and they don’t freeze your credit; they only alert a lender that you may have had your identity stolen, but don’t stop the lender from issuing credit in any way.

Fraud alerts at best are “notifications” that something may have gone wrong with your identity, but only suggest the lender takes additional steps to contact you before establishing credit in your name. It’s a false sense of security.

Where to Freeze:

Equifax

https://www.freeze.equifax.com/Freeze/jsp/SFF_PersonalIDInfo.jsp

Experian

https://www.experian.com/freeze/center.html

Transunion

http://www.transunion.com/personal-credit/credit-disputes/credit-freezes.page

Identity Theft Protection

A great many solutions are available to consumers. These provide various combinations of tools to proactively or reactively protect and restore an identity. Making a selection just requires a bit of homework. In cases where your bank is offering identity theft protection, they have done all the homework for you. In coming posts we will discuss different options with different services.