If you’re worried someone could steal your personal identity and buy something on credit or get a loan in your name, “freezing” your account at credit reporting bureaus could stop identity thieves cold.
Not only that, Congress recently passed a law that ordered credit reporting bureaus to offer free credit freezes. More on that below.
Identity theft is a growing problem, and not just for credit card purchases. Ambitious identity thieves are even trying to get auto loans using a mix of genuine and phony personal data – so-called synthetic fraud, according to credit bureau experts.
The ultimate goal for the identity thief is to get a fraudulent loan using an innocent person’s data, take possession of the car and steal it, or more likely steal it and resell it, often for export.
In an interview about phony auto loans Ken Allen, senior vice president, identity and fraud, for Atlanta-based Equifax Inc. recommended consumers should monitor their credit reports and consider freezing access. “You can lock your credit file from being accessed,” he said.
The first thing lenders do when someone applies for credit is to check that person’s credit history, to see how much debt they have, and whether they paid their bills in full and on time in the past.
If that consumer has frozen their account, the lender can’t access the credit history without their clearance, and that means the credit application goes no further. Only the consumer can lift the freeze after first proving their identity, for instance with a personal code number.
Besides Atlanta-based Equifax, the other two main credit bureaus are Experian, based in Costa Mesa, Calif., and TransUnion, Chicago. Some bureaus already offer free credit freezes.
“This message cannot get emphasized enough. To empower users, consumers – the thing is to be diligent,” Allen said. “The recommendation I would offer is to monitor your credit. Turn on notifications, watching for a change of address, or watching for transactions in your account that are concerning or not known to you. That’s step No. 1.”
As noted, Congress recently passed a requirement that credit bureaus must offer consumers free security freezes. The new requirement was part of the Economic Growth, Regulatory Relief and Consumer Protection Act signed by President Trump on May 24.
“That’s a good thing for consumers. It’s going to prevent at least some types of fraud,” Susan Grant, director of consumer protection and privacy for the Washington-based Consumer Federation of America, said in a phone interview. Some practical details still need to be worked out before the new law takes effect this fall, she said. “It gives people control they didn’t have before.”