Wheatworks Blog: Financial Matters

Almost half of the States have enacted laws which allow consumers to place a security freeze on their credit reports. This freeze locks access to a consumer’s credit report and credit score. Without the information available to businesses when they will not approve credit to a thief. When consumers with to apply for credit, they use a personal identification number (PIN) to unlock access to their credit report.

The security freeze laws passed by the states which have enacted them are designed to protect consumers from identify theft.

Victims of identify theft can place a freeze on their credit report for free. But in the credit reporting industry, easy prevention costs consumers more than the cure.

If you haven’t yet been a victim of identify theft most states allow credit reporting bureaus to charge a fee for placing a credit freeze on a credit report. Of course, once identity theft has happened, a freeze is too late.

Some states allow fees for removing a lift or placing a second freeze on an account. For example, in Maine, a state which allows credit bureaus to charge a $10 fee to place a freeze on a credit report, a couple’s cost to freeze their credit reports would be $60; 3 credit bureaus at $10 a pop for both partners.

Is a credit report freeze a good thing? In spite of the fact that the credit reporting agencies have a new revenue stream, it may make sense to place a freeze; especially if you rarely apply for new credit. But remember, credit includes buying a home, applying for a credit card, buying a car, and applying for a department store credit card.

If you’re interested in learning more about the Security Freeze laws enacted by the different states, the Consumers Union has an informative page at: http://www.consumersunion.org/campaigns/learn_more/003484indiv.html