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When to freeze
You probably need to freeze your credit if:- You've already been the victim of "new account" fraud. If someone stole enough information about you to open a credit card account or get a loan in your name, then you need to make sure such fraud doesn't happen again.
On the other hand, if the thief just swiped your credit card or credit card number, a freeze is definitely overkill. Just report the theft to your credit card issuer, fill out its paperwork and go on your way with your new card.
- You've been told that your personal identifying information has been compromised. More than 200 million personal records have been stolen, hacked into or otherwise compromised since the Privacy Rights Clearinghouse started keeping track in 2005. You probably don't need to bother with a freeze if thieves accessed a database that contained just your credit card number. Credit card fraud is relatively easy to catch and fix without long-term damage to your credit reports.
If, on the other hand, the criminals got into records that contained the keys to your financial identity -- your name, Social Security number, address and date of birth -- you should be concerned. There's no guarantee you'll become the victim of new-account fraud, since typically the bad guys use only a fraction of the records they steal in database breaches, but the odds of becoming a victim of new account fraud just went up.
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- Your wallet or purse is missing. The thief now has your driver's license with your name and address. You may have been smart enough not to carry your Social Security card, but the number may be on your health-insurance card. Or the thief could use the information he now has to buy your number online. In any case, it's time to shut down the candy store.
- You don't trust your nearest and dearest. As I outlined in "8 signs you may know an identity thief," you may be most at risk not from strangers but from relatives, friends, acquaintances and household employees who have access to the details of your personal and financial life. If you have reason to suspect someone in your life is less than honest, a credit freeze could be warranted.
- You just can't sleep at night without it. I'd ask you first to read "The hysteria over identity theft" so you'll have a clearer idea of your actual risk. If you still want to get a freeze after that, you have my blessing. I've heard from many readers who weren't at any great risk for identity theft, but who still insisted on getting a credit freeze for peace of mind -- and are glad they did.
If you want to institute a credit freeze, follow the links to Equifax, Experian and TransUnion to find instructions on how to go about it.
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Easier credit freezesThere's one way to make sure identity theft won't happen to you: Freeze your credit file so nobody -- including you -- can open a new account. The process of freezing your file just became easier.
Although several companies offer to place fraud alerts or freezes for you, it doesn't make much sense to pay others to do what you could do yourself for less (or for free, in the case of fraud alerts). Don't institute a freeze if you're about to be in the market for credit, and make sure your PIN is kept in a safe place so you can thaw the freeze when you want.
Liz Pulliam Weston's latest book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Updated Feb. 5, 2009
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