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Consumer Action: Putting The “Freeze” On Credit Files
By: James Dimmitt
In the wake of 40 million MasterCard, Visa, Discover, and American Express
accounts recently being breached, consumers and legislators are scrambling for
ways to protect their personal and financial information from being hijacked and
used fraudulently by hackers and ID thieves.
One type of privacy protection being widely debated is the option to “freeze”
your individual credit reports. Californians have been protected by such a law
since 2002. Vermont, Texas, and Louisiana have also passed “freeze laws” and
other states are taking a closer look at enacting similar types of consumer
protection.
Placing a freeze on your credit files with the three major credit reporting
agencies - Experian, TransUnion, and Equifax - effectively shuts out potential
lenders from accessing your credit files in order to make you an offer for
credit. It would also protect your data from being used by identity thieves.
When applying for new credit accounts or loans, consumers would use a special
password to “unfreeze” their accounts.
Consumer advocates who support such a freeze point out that this type of privacy
protection “prevents the damage before it occurs.” Consumer action groups see
this as one of the most effective measures available because it places the
control in the hands of the consumer and not the data-collecting agencies who
profit from selling consumer information.
Companies that sell credit file data, including the credit reporting agencies,
argue that freezing credit files is “overkill.” For some people, such a freeze
could become a constant hassle. Before applying for a loan or opening a new bank
account, they would have to contact the credit bureaus to temporarily unfreeze
their files, a process that could take several days.
They also claim it would prevent consumers from taking advantage of instant
credit promotions such as “10% off purchases” when applying for a new
store-issued credit card. And applying for a mortgage would become “more
complicated, with even more paperwork.”
Whether you feel the option of being able to freeze your credit data is a good
idea or a bad idea one thing is becoming increasingly clearer - consumers want
more control over who has access to their personal and financial information.
© 2005, http://www.yourfreecreditreportnow.com
About the Author:
James H. Dimmitt - James is editor of "TO YOUR CREDIT", a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and receive
his e-book “IDENTITY THEFT- How To Avoid Becoming the Next Victim!” and other free bonuses by visiting http://www.yourfreecreditreportnow.com |