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.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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