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Second Credit Bureau Offers File Freeze

Consumer credit reporting bureau Experian today announced that it would allow consumers in all 50 states to freeze their credit histories, becoming the second of the three national credit bureaus to offer the freeze option.

The service, which will be offered in all 50 states and the District of Columbia starting Nov. 1, gives consumers another option for safeguarding their credit file against identity thieves. The file freeze will be free for ID theft victims, and cost $10 to place, temporary lift, or remove for all others.

The move comes just two weeks after another of the big three credit bureaus -- TransUnion -- broke ranks with the industry in providing the service nationwide.

"Now that a national model for file freezing has emerged, Experian is offering this option to help prevent consumer confusion," said Kerry Williams, group president of Experian's credit services division.

David Rubinger, a spokesperson for Atlanta based credit bureau Equifax, said the company plans to make a similar announcement soon, but that it is "still finalizing the operational details."

Currently, at least 39 states and the District of Columbia allow consumers to freeze their credit files, but many of those laws do not take effect until 2008 or 2009. Assuming Equifax does offer the freeze, it would effectively mean that consumers in 15 states will have the ability to freeze their credit where they previously did not, as four states with freeze laws already on the books only offer the right to confirmed ID theft victims.

For the millions of consumers who receive notice each year that their personal or financial data was lost or stolen, a preemptive security freeze can offer peace of mind. It blocks businesses and potential fraudsters from gaining access to a consumer's credit report and score, and from granting new lines of credit in the consumer's name. In many states, consumers who want to remove the freeze can use a special identification number to unlock access to their credit file.

Consumers should be aware of the side-effects that a credit file freeze can bring. For one thing, a freeze can make it very difficult to obtain instant credit, as the consumer must first thaw the freeze (for a fee). In addition, some companies routinely run background checks on potential employees, so job hunting could become more complicated with a freeze in place.

Consumer advocates say the credit bureaus have traditionally resisted offering credit file freezes because they make money by selling access to the information to potential creditors. In May, ran a story that examined the resistance that the credit bureaus and its industry lobbyists staged in fighting state freeze laws.

Experian's Williams said a fraud security alert is a better option for many consumers who are concerned about possible ID theft. If you have a fraud alert on your credit file, and you or someone else tries to open a new line of credit in your name, the bureaus are supposed to contact you by phone to verify the transaction. In theory, the bureau is not authorized to open the account without reaching you, but even fraud alerts are sometimes ignored.

Consumers in all 50 states and the District can place a 90-day fraud alert for free by phone by calling any one of the big three bureaus (in turn, that bureau is required to alert the other two to take similar measures). Consumers are free to renew the 90-day fraud alert as many times as they want. By submitting a police report documenting their plight, ID theft victims can place an extended fraud alert for free that lasts for seven years.

The credit bureaus prefer to sell credit monitoring services, but consumer advocates say these pricey services don't prevent ID thieves from opening new lines of credit in your name. The bureaus also have profited by selling consumers the right to view their own credit histories. Be advised that under federal law, all Americans have a right to one free copy of their credit report from each of the big three bureaus, per year.

Jeannine Kenney, a senior policy analyst with ConsumersUnion applauded Experian's decision as "a strong first step," but said more action is needed by states and the federal government to guarantee that these new abilities become rights, and that freezes are not bundled with other fee-for-service offerings.

"State and federal action is appropriate to ensure that consumers are not misled about what their rights are," Kenney said.

Kenney added that states need to continue to fight for reducing the barriers to filing a freeze, such as cost and the current requirement that the initial freeze be placed via certified mail. Such requirements add to the cost of filing a freeze while doing little to verify the identity of the filer (the Post Office typically doesn't check your ID when you send something via certified mail).

"The cost, method and ease of temporarily a freeze can all be artificial barriers if not done correctly," Kenney said.

Before you pay for a credit freeze, check to see whether your state already offers such a right. Some states allow consumers to place and lift freezes for free, or at a lower cost. More information on state credit freeze laws is available at this link. Check out Privacy Rights Clearinghouse for contact information for the big three, as well as tips on what to do if you suspect you've become a victim of ID theft.

Update, 10:15 a.m. ET: Added information and quotes from Consumers Union and Equifax.

Update, 4:01 p.m. ET: Previously, the credit bureaus have required consumers who wish to freeze their credit file to do so in writing, via certified mail -- unless required to provide other options by state laws. Experian now says that beginning Nov. 1, it will allow consumers to file, lift or remove freezes through an automated process on its Web site or over the telephone.

Update, 4:55 p.m. ET: Round and round we go. Experian's Maxine Sweet just called me again to say that she spoke too soon, and that the company will in fact not be able to offer consumers the right to file a freeze by phone or the Web by Nov. 1. Until the company says otherwise, consumers will still need to file for a freeze in writing, via certified mail.

By Brian Krebs  |  October 4, 2007; 9:32 AM ET
Categories:  From the Bunker , Safety Tips  
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I read this article twice and I'm still not gettin it. Its all so confusing, why isn't it just set up so that the consumer is the ONLY authorized person to access their own file or grant permission for others to access it. In this techno age such a simple system shouldn't be difficult to place. That way the consumer has total control over their credit and access to it, not potential employers, car dealers, banks and credit companies.

Posted by: darnell p | October 4, 2007 11:15 AM | Report abuse

darnell p is right. I think this is how the tax system works. Only you and people you authorize explicitly can check information in your file with the IRS. Should be no different with your credit information.

If the IRS doesn't work this way, it should.

Posted by: samantha | October 4, 2007 12:48 PM | Report abuse

I think the above comments show just how little most people know about how little control they actually have over their personal information.

Posted by: TJ | October 4, 2007 1:31 PM | Report abuse

It sounds like the freeze is only for getting a NEW LINE OF CREDIT. I wonder if utility companies can still ask for a social security number but never check the persons credit, thus still allowing identity theft.
Also, it sounds like this freeze will not permit companies and debt collection agencies from reporting negative information to your account, whether due to identity theft or not.
It sounds like a step in the right direction, but it still not enough. DarnellP is right; individuals need to have complete control over their credit histories. If someone wants to give someone a loan, they should look at bank statements and pay stubs, using the car or house as collateral in the cases of a car loan or mortage loan. That would be way more effective and simpler than taking someone to court at a later time if they default on a loan.
I personally believe that we have a WEAK defense against identity theft because the big 3 credit reporting agencies want to make money selling these lame ID Theft protection services. Also, lenders love to lend to subprime borrowers because they can then charge a higher interest rate.
Sorry I'm so skeptical of everything. I'm not like this about every topic, just in cases where abuse is so blatant.

Posted by: Josh, Fairfax | October 4, 2007 2:22 PM | Report abuse

"Consumers should be aware of the side-effects that a credit file freeze can bring."

Ok. Maybe it is just me, but the side-effects listed don't seem to be that big of a deal.

Other than a recent automobile purchase, I can't think of a single time in the previous 3+ years that someone would have needed to do a credit check on me. And if they did, I would certainly want to know about it, and why they needed to check!!

I can't believe that for the majority of US citizens, their lives are that dynamic, where they are regularly getting "instant loans", purchasing cars, houses, changing jobs, etc., all those activities requiring credit checks.

I suspect that the average US consumer would need at most one, perhaps two, credit checks run per year for those events mentioned.

As a result of ready access to the data, with little to no regulation regarding who gets it and when, and the general FUD created by the companies making money from providing access to the data, I suspect there are likely more companies checking credit histories than should be. I read that Insurance companies are starting to do blanket credit history checks on their customers as a metric for establishing policy rates.

I would like to see everyone freeze their credit histories, and then let the credit reporting industry work out the best way to allow individuals to unfreeze their credit histories as needed. These recent moves allow that, the word now needs to get out that everyone should freeze their credit and let the industry correct itself.

Posted by: SayWhat | October 4, 2007 2:47 PM | Report abuse

There should be a number to automaticly freeze your credit account. There is too much confidential information available for companies to get. This information should automaticly require a pin number if a company should have the need to check your credit. There are sometimes duplicate dilquent credit information applied to ones credit file. There should be something in place to verify this information and check for duplicaitons, it is not fair to the consumer. It seems like the consumer has the least amount of protection.

Posted by: Juna | October 4, 2007 8:02 PM | Report abuse

Would someone please explain to me why we need 3 credit bureaus?

Posted by: Cynical Steve | October 4, 2007 9:14 PM | Report abuse

It seems that to me the "Credit Report Freeze" would serve most consumers NO BENEFIT. Looking at the info link for NY in this article everyone that a consumer might want to stop looking at your report STILL WILL HAVE FULL ACCESS!! So, again what is the feature benefit to me as a consumer?

Samo Samo.

Consumer 0
Creditors/employers 10

Posted by: TriCountyServices | October 5, 2007 10:38 AM | Report abuse

As June above and Shakespeare put it, "A consumation devoutly to be wished.": "Thank you for calling xxxx Credit Bureau. Please enter your identifying information now... Your account profile is currently frozen. Please select "1" to unfreeze it. Your account profile will remain unfrozen until you re-freeze it again by calling us. Thank you."

(Or vice versa...)

Posted by: Pete from Arlington | October 5, 2007 11:03 AM | Report abuse

After reading the information on the website, it seems the freeze only prevents access for obtaining new credit. If others, companies and the like can still access your credit reports, what's the point?

Posted by: ralfi'sgurl | October 5, 2007 11:16 AM | Report abuse

Transunion came out with a new product recently called "True Lock", where you can lock and unlock your credit profile within seconds via your computer. It's free credit freeze, but with a catch; the service is attached to the purchase of a monitoring service. However, if you decide to purchase a credit freeze separately you must submit your request via certified mail.
To get your credit report, credit scores or monitoring service from any of the credit bureaus, all what you need is access to the internet and a credit card, but when you want to freeze access to your credit report you must submit your DNA via certified mail.
Once again, the 3 CRA's lobbyists are in control of our legislators and there's little we can do!

Posted by: Nabil Captan | October 5, 2007 5:11 PM | Report abuse

To those who do not see the benefits of Security Freeze:

Imagine yourself with this:
I have a house with NO LOCK.
I do not lock my house.
Bad person comes in my house and messes things up, knocks things down, reads my bank statements, eats my foods.....
I come home: I have to CLEAN everything.
Yet, the next day, I still don't lock.
Bad person comes again, messes up again..
I clean again...
Yet, the next day, I still don't lock.
And so, I clean, and clean, and clean...
Until one day, I wish I have a lock.

If you don't lock your car, it may not be messed up today, but it will be soon. (Sooner than if you do not lock.)

If you don't lock your house, it may not be messed up today, but it will be soon, too.

Likewise, if you don't FREEZE your credit profile, it may not be messed up today, but it will be soon. If you have read news lately about stolen Identity cases (government's laptop stolen, bank being hacked, university's Social Security Numbers seen....), then, you can have a reasonable expectation that Identity Theft is a real current problem, and is a growing future problem.

Someday, the bad person will make a mess by: opening a credit card with Citibank, spend $10000, let it go into collection, IN YOUR NAME.

Would you like to clean your profile of $10000 credit accounts that are in collection?

And then, after you spend over 600 hours (estimates given by to clean that, would you like to CLEAN AGAIN? and again, and again....

And if you ask, why bother cleaning it, just let it be in collection, I am not borrowing money, and I don't mind collection account...

Well, then, please know:
Bosses check your credit history before hiring you.
Bosses check your credit history while hiring you.
If you have a collection entry of $30000, would your boss hire you in the first place? (I don't know about other states, but I know for Californian: California law has a special exception that allows this: after hiring, if bosses suspects someone in the company is stealing, for investigative purpose, bosses can secretly and quietly check all credit profiles of all workers, without announcing publicly.)
After hiring, if you have a collection entry of $30000, would your boss keep you in the first place?
After hiring, if you have a collection entry of $30000, would your boss give you promotion, pay you more?
The list of people that check your credit profile is long:
Some Utility companies: phone, gas, electricity...
Some Insurance companies (Not the insurance companies in California, luckily, the law does not allow insurance companies to check Californian's credit, then, give rate based on that.)
Other credit card companies you have: Often, there is a UNIVERSAL DEFAULT agreement between you and your credit card companies. What does it mean? It means: if bad thing happens in 1 card, it will universally affect other cards. Again, what does it mean? Crooks open a card, use it, mess it, and put it in collection. Other cards see that, think you did it. Now, in the eyes of other cards, you are bad...So what do they universally do? They are afraid you would spend and not pay (they have just seen an example). Fearing you will have a next collection account with them, they can: stop the card (happened to me), raise the rate (sadly, happened to me, too), or lower your spending limit to $300 (and this, too, happened).
So, freeze your file to preserve your life.
(In all fairness, please don't flat out trash my ideas, just hear me out, meet me halfway, go check out the facts, then, take action for your life, thank you.)

Posted by: Californian | November 5, 2007 9:04 AM | Report abuse

We the citizens should solve the credit fraud problems from the root. If someone stole my ID and got illegal credit, then why should I have to prove that "I did not do it". The law should require companies that granted the illegal credit to PROVE that I applied and obtained the credit.

Let's all write to our elected officials DEMANDING a change of law to require collectors of credit to prove the collectee's ID.

My ID is to identify me. Today, anyone can take my ID and pretend it is me. That must be changed.

Posted by: TakeBackMyCountry | November 8, 2007 10:34 AM | Report abuse

My Social Securty is stoling I want to freez my file

Posted by: ِAdul Yazidi | November 9, 2007 2:44 PM | Report abuse

Organized crime can access your credit report by pretending to be a collection agency. The credit freeze law allows collection agencies to access your report even when it's frozen.

Collection agents should be required to have a federal collection license, which should require a criminal background check. Criminals should never be given access to credit files, especially not frozen files.

We could also get rid of most of the credit mess by simply passing a national usury law. If all interest rates had to be reasonable, credit card companies would stop trying to convince people with poor credit to sign up for ruinous interest rates and get over their heads in debt.

Posted by: Joe Bloe | November 12, 2007 10:10 PM | Report abuse

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