Identity theft is something everyone wants to avoid. The problem is, there is no way to prevent it with 100% certainty. Our confidential information rests within computer databases that are all subject to crafty computer hackers.
There are services available for purchase to monitor your credit report and alert you to suspicious or abnormal activity. In addition, there is identity theft insurance to help restore losses and/or help pay for legal costs to restore the integrity of your identity with credit reporting agencies. Unfortunately, each of these services only activate once your identity has already been stolen. They are only damage control devices. They do not do anything to prevent damage from occurring in the first place.
One tool you can use to avoid damage to your credit due to identity theft is a Credit Freeze. A credit freeze instructs credit agencies to "freeze" or "lock down" your credit. This restricts any and all organizations from being able to obtain your credit information. It also prevents anyone from being able to open a new credit account in your name. Therefore, an identity thief with your information cannot use it to open a credit card in your name. This can help avoid damage to your credit report because of identity theft.
The downside to this tool is it also restricts you from being able to open credit accounts for yourself. If you need to obtain credit, such as a car loan or apply for a store credit card, you must first unfreeze or "temporarily lift" your credit freeze. Once the freeze lift is in place, you can apply for the credit you are seeking. Some people feel this is a hassle.
There are 3 credit reporting agencies: Transunion, Equifax, and Experian. To freeze your credit, go online and establish a credit freeze with each of the three credit agencies. Then if you want to lift the freeze, you once again need to go online and place a "temporary lift" of the credit freeze to allow an organization to access your credit report. You can accomplish placing a freeze and lifting a freeze by a phone call or regular mail (which will of course take longer).
I have found when I need to lift a credit freeze for myself, I can access each of the three credit agencies online and temporarily lift the credit freeze in about 15-20 minutes total. Each of the three credit reporting agencies give you the ability to lift the freeze temporarily and then have it automatically freeze again with a time period you set. For example, you can lift a credit freeze for a week, and then set it to automatically freeze again once the week is complete.
While establishing a credit freeze can help prevent a thief from opening credit in your name, it cannot deter one of the other major problems caused by identity theft, false tax returns. With your confidential information, a thief can still file a false tax return in your name and seek a refund to steal.
There are many questions you may have about locking down your credit with a credit freeze. Below is a link to a page for Frequently Asked Question on the Federal Trade Commission's website. This resource has served me well and should answer any further questions you may have:
https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs
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