November 14, 2011 09:00 AM
By Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management
For most of us, good credit is a necessity. We need it to take out a mortgage, buy a car, get a credit card and rent an apartment.
And yet some 8.1 million Americans were victims of identity theft in 2010, according to the Federal Trade Commission. Recently, online-gaming companies, financial-services firms and Internet services have been targets of cyber attacks that could potentially lead to identity theft. If you're a victim of identity theft, it may be impossible to get a loan or credit card, and it might take years to get your record corrected.
Worried that your identity has been stolen? There's a number of ways to protect yourself, but one of the most effective may be a credit freeze, also known as a security freeze. Here's how it works: Contact all three major credit-reporting agencies - Equifax, Experian and TransUnion - and supply identifying information, including your address, date of birth and Social Security number. You can do this by mail or online by visiting the three firms' websites.
Once the freeze is in place, no one can open an account in your name and the credit reporting agency cannot release any information from your credit reports without your express authorization. But that means you can't get new credit, either. So, before trying to get a loan or credit card, you'll have to contact those same agencies and unfreeze your credit, which may take a few days.
The cost to freeze and unfreeze your credit varies by state. In a few states, there's no fee. But in most states, it's $5 or $10 per agency to place or remove a freeze. Fees are typically waived for identity-theft victims.
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