Posted by Mike Smith :: November 16, 2007 @ 9:10 am

A new tool in the fight to protect your identity is now available: the ability to freeze your credit report. The details were discussed in this Red Tape Chronicles Article and are highlighted below.

What it Is

A security freeze on your credit reports will prevent access to your report from new creditors. In this way, identity thieves will not be able to access your report or open new accounts in your name.

The Good

The freeze provides a new level of protection to your identity. It is one of the first proactive ways to prevent identity theft rather than a reactive one after theft has been attempted. Don’t underestimate the power of this protection. Even though there are numerous disadvantages of security freezes, this one advantage might make it worth it to you.

The Bad

• Freezing is time-consuming and may be expensive, depending on the state in which you live. The process generally involves sending certified letters and $10 to each of the three major credit bureaus

• You’re frozen out of your own reports, so you’ll need to undo the process before applying for credit, such as a P2P loan on Lending Club, and then refreeze the reports once your credit is established. This will incur more fees and time on your part

• A security freeze will not stop pre-screened credit card offers. See my post on that subject for information on how to opt out of such offers

• Existing creditors will still have access to your report and can send you offers for their products and services

• Having your credit reports frozen could lead to minor inaccuracies in your report if companies attempting to update account information have trouble getting access

Protecting your identity is a necessary and time-consuming process. I’ve discussed other methods, such as Credit Monitoring Services and accessing your free credit report, in the past. I also plan to do an upcoming post on Lifelock, which is a service making a lot of headlines lately. The bottom line is that security freezes aren’t the only way to protect yourself, but they are a unique element that you may want to consider for your overall identity theft protection strategy.