Security Freeze bills give you control over your credit report! Posted by mitcka at 04/06/05 10:00 AM

Twenty states are considering bills to give you control over the dissemination of your credit report information. This movement for more financial privacy is largely driven by consumer demand for real solutions to identity theft.

According to the National Council of State Legislatures, one of the most popular approaches to solving the ID theft threat this year is the “security freeze” bill promoted by Consumers Union, U.S. PIRG, and the state PIRGs [if you can forgive a little self promotion here, visit our Financial Privacy Now campaign to see how you can help in your state]. With bills in twenty states, consumers may soon enjoy the right to decide who sees their consumer credit reports.

State legislatures have tried to stop ID theft by increasing criminal penalties for a wide range of conduct. They've tried to give consumers better access to police reports when a wallet is stollen so consumers can clean up their credit mess. But none of this really helps that much as far as anyone can tell. ID theft remains a huge and growing problem. But there are some solutions--and they depend on changes in the way our financial information is distributed to those claiming to offer us credit.

A security freeze gives us all the ability to stop credit bureaus from giving out our credit information to potential thieves.

Here’s how it works. I am a thief. If I know just a little about my neighbor, or if I stole his wallet, I can apply for instant credit from a store. The store pulls my neighbor's credit report and approves the application. I start charging, and my neighbor gets a bad rap for not paying the bill!

Credit bureaus don't check the legitimacy of every request for our credit information. They process more than a billion requests for credit reports each year, and 4.5 billion credit report updates each month.

The credit reporting system may make it easy to grab a credit offer out of the mailbox, send it in, and get credit quickly (sometimes at a very high cost)—but it also makes it easy for someone else to steal our identities, get credit in our names, and create a huge mess.

The security freeze is a simple solution. My neighbor tells the credit bureau not to give out credit report information to any potential creditor. The credit bureau has to stop giving out my neighbor's credit report or credit score. Then, when I apply for credit under my neighbor's name, the credit bureau doesn't release the file and I don't get my application approved. ID theft thwarted. End of story.

While a security freeze won't stop thieves from stealing our information, it will protect us from some of the worst consequences of ID theft - having new credit accounts opening in our names.

comments (2)

1 Posted by George bailey at 11/07/05 11:08 PM

This is a great source of information. Thanks for the tips.

2 Posted by Pat Walker at 01/04/08 11:50 AM

The new law permitting the consumer to freeze their credit report packs a two-fold punch. It protects you from identify theft, yes. It also gives you the ability to opt-out of the powerful credit score game supported by business and government at the expense of the people. It is a way to say, "I do not choose to play."