People who are going through a divorce often realize that their soon-to-be ex-spouse has access to all of their personal information, which could be used to fraudulently apply for a credit card or take out a loan in their name. Their spouse knows their social security number, birthday, past addresses, and the answer to almost every security question that banks use to verify someone’s identity. Particularly when the divorce is not amicable, it becomes a real concern that the ex-spouse could open a line of credit in your name. Many people want to know how they can protect themselves.
You may have seen commercials for identity-protection companies or credit-monitoring services. These companies monitor your credit report and alert you when there is any change. However, they all include disclaimers saying that they are not able to protect you in all circumstances. These services typically cost $9-30 per month, which adds up over time. There is a simple solution that gives you better protection and costs less.
Most people do not realize that their credit report is open all the time. In other words, any company can find out their credit history, so they can decide whether or not to issue you credit. Therefore, without your knowledge, someone has access to all your personal information. However, you can freeze your credit so that it cannot be accessed without your knowledge.
Here is how this process works:
1. You request a credit freeze from all three credit reporting agencies (Equifax, Experian, and TransUnion). It takes 5-10 minutes for each credit agency and costs about $10 each.
2. Your credit report will then be “frozen,” so that no company can request that information without your permission. You will choose a username, password, and a code to control access to your information.
3. When you apply for a new line of credit, the lender will tell you that they need to access your credit report. You will usually only need to take this step for one credit agency. You will contact the credit agency and ask them to open your credit report for a short period (i.e., 24 hours). You will again pay a fee of roughly $10.
4. The bank or credit card company will request your credit report as they normally would, and your credit report will be re-frozen after the designated period.
Keeping your credit frozen is an excellent way to protect yourself because you have to explicitly give permission for companies to access your credit. Most people only open new lines of credit a couple times per year, so it is not necessary for it to be open all the time. Although it costs some money, the price is much less than identity protection services, and it is actually more secure. When you ask to have your credit frozen, you can also choose to receive notifications about your credit score and changes to your credit history.
Everyone can take this small step to help secure their finances and protect themselves from identity theft.
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