A credit report freeze is an effective tool in preventing one of the most costly and difficult-to-detect forms of identity theft – false new accounts opened in your name. New account fraud occurs when a thief uses your personal information to open up one or more new accounts for credit or services in your name. You’ll never see the bills, since they’re probably being sent elsewhere – so you’ll only learn of the new account when you find out that you have a bad credit score, or when you begin receiving calls or letters from debt collectors.
Before opening a new account, most reputable companies evaluate your creditworthiness by checking your credit report or credit score. A security freeze stops potential creditors from seeing your credit report and credit score unless you decide to unlock the credit reporting file with a PIN. The freeze stops the new account in the name of a thief because the creditor who is considering the thief’s application can’t check your credit report or credit score.
BUNK ALERT: A security freeze does NOT stop misuse by a thief of your existing bank account or credit accounts, which is called existing account fraud. You still have to check the monthly statements on your existing accounts for any erroneous charges or debits.
The procedures you must follow to place a Security Freeze on your credit records vary by state. Click here for a list of instructions by state.
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