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Putting Credit On Ice Carries Costs, BenefitsFreezing your credit can help protect your reputation as a credit-worthy consumer, but it's likely to cost you both time and money. Your costs for placing a credit freeze, also known as a "security freeze," can vary depending on where you live and how often you apply for new forms of credit. Freeze out thievesRequesting a "freeze" on your credit report blocks identity thieves from using personal information such as a Social Security number (SSN) to gain access to new forms of credit issued in your name. If thieves succeed and get the loan proceeds, they typically default on the loan or obligation that was taken out in your name, leaving you with a stain on your credit report that can take months or even years to correct. Most lenders review applications for credit by obtaining a credit report from at least one of the A credit freeze blocks these bureaus from releasing a credit report unless you lift the freeze. It does not, however, block companies that already are doing business with you from continuing to access your credit report, nor does it block you from obtaining copies of your credit report. You must block each credit report separately. Credit on iceWhile freezing your credit can be beneficial, it has drawbacks. Because a credit freeze blocks any business without an existing relationship with you from viewing your credit report, you must temporarily remove the freeze when you apply for a new credit card or loan. Freezing your credit costs time and money.
The credit freeze also affects any new relationship with a business or service that relies on viewing your credit report before offering services or setting prices, such as insurance companies or cell phone service providers. It's also worth noting that credit freezes affect only new accounts, not existing accounts, so you'll still need to monitor your credit report and financial accounts regularly to spot potential fraud. Understanding costsEach state can set its own rules about how a credit freeze works and the fees credit reporting companies can charge. Fees ranged from free to $10 in 2008. In states with $10 fees, that means the total cost of placing a credit freeze with each of the three major credit reporting bureaus would be $30 per person. Lifting the credit freeze temporarily or permanently could cost the same amount. In states with lower fees, however, the cost could be halved or even disappear. In addition, some states lower or waive fees for identity theft victims. To check the rules for your state, visit the "Financial Privacy Now" section of the Consumers Union site and click on "State Security Freeze Laws." Consumers who live in states without credit freeze rules still can file for a freeze using the voluntary programs the three credit bureaus provide. Each credit bureau charges a separate $10 fee for placing or lifting a voluntary freeze. You must lift the freeze to apply for new credit.
Information about voluntary freezes is on the Web sites of the major credit bureaus: Experian, Equifax, and TransUnion . Weigh optionsYour situation can help you decide whether it's worth filing for a credit freeze, according to Gail Hillebrand, senior attorney for Consumers Union, San Francisco. Consumers Union is the independent, nonprofit organization that publishes Consumer Reports magazine. "Anyone who has already been a victim of identity theft is probably going to want the freeze, because you know what you're in for and you don't want to go through that again," Hillebrand says. Filing a credit freeze also appeals to elderly consumers who rarely or never use credit. These consumers are at greater risk because their Medicare insurance cards still display SSNs. "There's a strong reason for those consumers to think about getting a freeze," Hillebrand says. "For everyone else, it's a personal choice balancing the disadvantage of having the freeze to the strong advantage of having the added protection." Fees range from free to $10.
Finally, a freeze always is a good idea for anyone who knows that sensitive information may have been stolen or placed at risk of theft by businesses that had a security problem. Hillebrand noted that identity thieves sometimes wait months before using stolen information, so a freeze can help the consumer stay on guard as time passes. Opt for an alertConsumers unwilling to pursue a credit freeze still can take other steps to protect themselves. One alternative is filing a "fraud alert," sometimes described as a "credit alert." This free alert is posted on your credit report to notify businesses that you have concerns about potential ID theft. A 90-day alert is available when you suspect ID theft has occurred. Victims of ID theft also have the option to place an alert on file for seven years. More information about fraud alerts is available on the Federal Trade Commission (FTC) "Fighting Back Against Identity Theft" site. When an alert is in place, businesses must take extra steps to verify your identity before issuing credit. Hillebrand describes a credit alert as a "yellow light" for businesses. In comparison, she calls the credit freeze a "red light" because it blocks access to the credit report. Other stepsSimple steps can help prevent ID theft.
Consumers can further reduce the odds of identity theft with these simple steps:
Make a choiceWhile a credit freeze may not be right for every consumer, Hillebrand notes that every consumer should weigh the risk of ID theft against the benefits of taking steps to protect his or her credit. "One of the wonderful things about having the freeze available is that consumers can decide for themselves," Hillebrand says. "It's a very individual choice." 
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