1 Great Way You Can Protect Your Credit

Freezing a credit report may sound like a drastic action to take after your identity is stolen, but nothing could be further from the truth.

Jul 6, 2014 at 11:00AM

Identity theft is a very real concern for many Americans. In fact, a December 2013 Bureau of Justice Statistics bulletin reports that about 7% of people over the age of 16 were identity theft victims in 2012 alone. If you are worried about an identity thief destroying the credit history you've worked so hard to build, there is one measure you can take to protect yourself that may not have occurred to you: freezing your credit file until you need to use it.

Credit Sign


Not all identity theft is equally bad
The majority (about 85%) of identity thefts involve fraudulent use of existing accounts, such as using stolen credit card information to make purchases. While these cases can be annoying, the problem can generally be taken care of relatively quickly and at little to no expense to the account holder.

However, cases where a victim's personal information is used to open new accounts are much more complex. This can easily ruin a good credit score, and it can take a long time and cost a lot of money to fully recover.

A lot of consumers may be especially vulnerable to identity theft. Were you possibly involved in one of the infamous data breaches that occurred over the past few years? Have you used a computer without updated Internet security software? Or, do you simply have too much to lose by having your identity stolen?

Freezing your credit is not just for victims
A common misconception is that a credit freeze is something you do after your identity is stolen.

The truth is, putting a freeze on your credit report is a tool available to every consumer who is concerned about becoming an identity theft victim.

Basically, a credit freeze will prevent anyone from accessing your credit report, including lenders. So, if your information is used to apply for credit, the lender won't be able to see your credit report, and therefore no new credit can be issued in your name. The freeze remains in place until you choose to lift it.

Is a credit freeze a good idea for you?
A credit freeze does give you maximum control and peace of mind when it comes to protecting your identity. However, there are a few things to know before you do it.

The biggest consideration is how often you anticipate needing to use your credit in the near future. It is possible to apply for credit by permanently or temporarily lifting the freeze, but know that it is a process that involves some hassle anytime you need to do it.

Speaking of hassle, also bear in mind you'll need to freeze your credit with each of the three credit bureaus individually (Equifax, Experian, and TransUnion).

Also, freezing your credit has absolutely no impact on your existing credit lines. For example, you'll still be able to use your credit cards just as you normally would. So, you'll still need to be somewhat cautious because a credit freeze does not protect you if someone steals your existing account information.

Does it cost anything?
Maybe. If you are already a victim of identity theft, freezing your credit is absolutely free. For non-victims, the fee charged varies in accordance with state law, but is a maximum of $10. In some states, like South Carolina, freezing your credit is free, whether your identity has been stolen or not. Here is TransUnion's table of fees to give you an idea of what to expect.

How and when to "thaw" your credit
In order to be able to apply for credit with a freeze on your reports you'll have to lift the freeze, either temporarily or permanently.

Both are relatively easy, and must be done with all three bureaus individually, and all three let you unfreeze your credit either online or by phone for a specified period of time. You'll need to sufficiently prove who you are with your Social Security Number, date of birth, and the Security Freeze PIN you are given when you place the freeze in the first place. For each bureau's procedures for freezing and unfreezing your credit, check out these sections of Experian's, Equifax's, and TransUnion's websites.

While it sounds like a very drastic action, freezing your credit can be an excellent way to protect the credit you've built. It doesn't affect your ability to use your existing credit accounts, and the procedure for temporarily lifting the freeze is relatively easy and straightforward.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers