Agency to Offer Credit Freezes
Friday, October 5, 2007
Experian, a major credit reporting bureau, yesterday said it would allow consumers in all 50 states and the District to freeze their credit histories, giving potential identity theft victims another tool against predators.
Experian and the other two major credit bureaus -- TransUnion and Equifax -- maintain the credit histories of U.S. consumers. These histories are accessed by businesses when consumers want to buy a house or a car, rent an apartment or engage in any activity requiring a line of credit. The credit bureaus also sell some consumer credit data to banks, marketers, insurance companies and others.
Experian's credit freeze service, available Nov. 1, will be free for victims of identity theft. For others, it will cost $10 to place, temporarily lift or remove a credit-history freeze at each of the three bureaus.
Experian joins TransUnion in offering customers the freeze option. Equifax is set to join soon.
A preemptive credit history security freeze is one way to limit damage for the millions of consumers each year who receive a notice that their personal or financial data were lost or stolen. The freeze blocks businesses and potential criminals from gaining access to a consumer's credit report and score, and from granting new lines of credit in the consumer's name. In many states, consumers who want to remove the freeze can use a special identification number to unlock access to their credit file.
Credit file freezes have consequences. A freeze can make it difficult to obtain instant credit, as the consumer must first pay to "thaw" the freeze. In addition, some companies routinely run background checks on potential employees, so job hunting could become more complicated.
Under a law that took effect in July, District residents can place, lift or remove a freeze for $10. Maryland's law will require consumers to pay just $5, but it does not go into effect until January. Virginia has no credit freeze law.
At least 39 states and the District have laws that allow or will allow consumers to freeze their credit files, but many do not take effect until 2008 or 2009.
Yesterday's announcement comes just two weeks after TransUnion broke ranks with the industry to provide the freeze service nationwide.
The credit bureaus typically interact with businesses, not consumers, and have made their money by selling consumer data, consumer advocates say. The recent concerns over identity theft have forced the bureaus to become more consumer-oriented.
"Now that a national model for file freezing has emerged, Experian is offering this option to help prevent consumer confusion," said Kerry Williams, group president of Experian's credit services division.
David Rubinger, a spokesperson for Equifax, of Atlanta, said that the company plans to make a similar freeze announcement soon but that it is "still finalizing the operational details."