credit freeze Category
Dear Liz: Our 24-year-old son lives with us. He failed out of college, has been fired from two restaurant jobs and is working part time at a grocery warehouse. He has neglected to pay his credit card for several months. He also waits until his cellphone carrier threatens to turn off his phone before he pays half of that bill. We are concerned that his poor payment history may start to reflect on our good credit histories. We are retired and may want to build a new house. His bills are sent to our address, and creditors call our home phone number looking for him.
Answer: His debts shouldn’t affect your credit reports and scores unless you cosigned loans or other credit accounts or added him as a joint user to your credit cards.
Note the word “shouldn’t.” It’s possible that an unethical collection agency would try to get you to pay these bills by posting the overdue accounts on your credit reports. That could negatively affect your scores. Check your credit reports at least once a year at http://www.annualcreditreport.com. You also may want to consider ongoing credit monitoring, which can alert you if any collections or other suspicious activity shows up on your reports.
Speaking of unethical actions, you need to consider the possibility that your son could steal your financial identity. He probably has access to the information he would need to open new accounts in your name, including your Social Security numbers. His failure to pay his bills, even though it appears he can, indicates some moral shortcomings. He may not be low enough to rip off his parents, but if you have any suspicions about his trustworthiness, consider putting a credit freeze (also known as a security freeze) on your credit reports. This freeze should prevent anyone from opening credit accounts in your name.
Finally, you can write letters to creditors telling them to stop contacting you. You run the risk that such a letter could lead a creditor to sue your son. But his creditors may sue him anyway if he doesn’t respond to their requests for payment.
Dear Liz: Is it possible to put some sort of block on one’s credit reports to prevent current and subsequent unsecured creditors from attaching additional negative marks? I’ve been told by someone I was referred to (I think he’s an ex-mortgage professional) that it’s possible to place blocks on one’s credit to prevent further negative reporting by unsecured credit card issuers as long as they don’t have a copy of your actual Social Security card. It sounds too easy. Everyone would be doing it to minimize credit-rating damage.
Answer: Of course they would. What the former mortgage pro may have been referring to is a credit freeze, which allows you to block potential future lenders from seeing your credit report.
Credit freezes are an important tool for victims of identity theft or those at high risk of having their identities stolen. With the freeze in place, a lender processing the application of the identity thief won’t be able to access your report and will almost certainly refuse to open a new account for the criminal.
If you need credit, you will have to unfreeze your report to allow a lender to see your data. Credit freezes are available at each of the three major credit bureaus that collect your credit information, although there are typically fees involved for freezing and unfreezing your files.
A credit freeze does not prevent your current lenders from reviewing your credit reports or adding new information to them. The best way to prevent negative information is to pay your bills on time, borrow only what you can afford to repay and prevent disputes from going to collections.
Dear Liz: As part of our mortgage refinance, my wife and I were provided copies of our credit reports and scores by the credit union making our loan. Our scores are great, ranging from 777 to 819, but I was surprised to see in the negative remarks section a note that I had “too many inquiries.” Reviewing the list I saw one business I recognized (a new brokerage account), one of our credit card issuers and four inquiries from CBC Innovis. What is CBC Innovis and how can I tell them to butt out of my credit history? I’m just glad I have good credit and their poking around didn’t have a material effect on our ratings. Others might not be so fortunate.
Answer: CBC Innovis is a reporting agency that provides a variety of services, including offering credit reports, tax transcripts and appraisal, title and settlement services to lenders.
If the inquiries weren’t connected to your refinance deal, they might be related to a job application, because CBC Innovis also provides employment screening and Social Security number validation. It offers skip tracing and other services for collection agencies and landlords, but given your scores and your situation, those are unlikely reasons for the inquiries.
In any case, you have nothing to be worried about. The only reason you got the “too many inquiries” message is because there wasn’t much else negative to say about your credit situation, which is excellent. Inquiries in general should be a minor concern for most people, since most have little or no effect on their scores.
Unfortunately, it’s pretty tough to tell a company to “butt out” of your credit history, since a variety of companies have perfectly legal access to your information. If you really want to lock down your reports, you can consider a credit freeze, but you’ll still have to “unlock” your information to various companies when you want a loan. For more on credit freezes, visit the Consumers Union website and search on “security freeze.”
photo credit: Archie McPhee Seattle
Some critics disparage the database breach laws that force companies to reveal when your private personal information has been compromised. Only a small percentage of such stolen information is used to commit theft, they say.
Except if you’re a victim of a database breach, your risk of becoming an identity theft victim is four times higher than the that of the general population.
That is the conclusion of a new Javelin Strategy & Research study:
Overall, Javelin’s 2008 Identity Fraud Survey found that 4.32% of U.S. adults had experienced fraud within the past 12 months. Yet of the 11% that said they had been notified of a data breach within the past 12 months, one in five reported that they had also been the victim of some kind of fraud within the past 12 months. That means victims who had been notified of a data breach were almost four times more likely to be victims of fraud as well. The pattern of increased fraud victimization among consumers notified of a breach within the past 12 months remains consistent from 2006 to 2008, indicating that this is not a one-time anomaly.
If you’ve been notified that your data has been compromised, you should:
- Closely monitor your existing accounts
- Consider a credit freeze, particularly if your Social Security number was compromised
- Otherwise, put a fraud alert on your credit reports.
Experian and Equifax last week made it official–like TransUnion, they’ll be offering consumers the ability to freeze their credit reports. Sandra Block atÂ USA TodayÂ wrote a nice little summary of what freezes are all about.
Basically, this will extend credit locks to folks in the 11 states that didn’t have already have laws allowing their residents to freeze their credit reports (Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina and Virginia) and in the five that limit protection to ID theft victims or those who have been told their data has been compromised (Arkansas, Kansas, Mississippi, South Dakota and Washington).
This is a good thing, although I still believe (as I wrote inÂ “Lock your credit away from ID thieves”) that it’s not an option most people will want to take once they understand the costs and hassles involved. There will be fees for locking your report and again for unlocking it when you need credit (figure around $30 each time for all three bureaus) and a delay of a few days–no more instant credit.
Those are among the reasons only 60,000 to 70,000 people have taken advantage of freezes so far, according to the bureaus. We have to consider the source, of course–bureaus are in business to sell credit info–but no one would contend that more than a tiny fraction of those who have had the ability to freeze their credit so far have done so.
Still, it’s something that should be available for everyone who wants this layer of protection.