You and Your Credit Report

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By Susan E. Sheely
Spring 2009 In Brief Newsletter

Chances are you regularly find your mailbox overflowing with envelopes promising fast and easy “pre-approved” credit. Although they are designed to tempt the credit consumer, often they tempt the identity thief instead.  “New Account” fraud occurs when a thief obtains another person’s identifying information and uses that information to open new credit accounts in that person’s name. The thief runs up balances on the accounts and then fails to pay the bills. But, because the accounts were opened in the name of the victim, it is the victim, not the thief, who bears the brunt of the resulting collection actions. The resulting damage to a victim’s credit report can take months, even years, to repair.

What can you do to protect yourself from this type of fraud? First and foremost, check your credit report regularly. Although there are many companies who advertise credit monitoring for a fee, consumers are entitled to receive one free credit report from each of the three major credit reporting agencies each year. The three major reporting agencies are: TransUnion, Equifax and Experian. Checking your credit report regularly allows you to quickly identify errors or unauthorized activity and report those matters to the appropriate agency. More information on obtaining your free credit report can be found on the website: www.annualcreditreport.com or by calling 1-877-322-8228.

Another tool to protect yourself is to put your credit report “on ice.” Minnesota Statute Section 13C.016 enables any Minnesota state resident to “freeze” their credit report indefinitely either with, or without cause. Freezing prevents the release of information contained within a consumer’s credit report by a credit reporting agency to a third party for the purposes of opening a new account. This is intended to effectively prevent creditors from issuing any further credit in the name of that consumer without that consumers express consent.

Victims of identity theft can freeze their credit reports without charge. People who have not been victimized by an identity thief but who want to proactively protect their credit can freeze their credit reports for a nominal fee ($5.00). After the freeze request is processed (within three days) the credit agency issues a Personal Identification Number (PIN) to the consumer. The PIN number is used by the consumer to authorize credit inquiries by particular creditors or to remove the freeze for a specified period of time. Again, for non-victims, there may be a $5.00 charge for removing the freeze. In order to be effective, a freeze report must be filed with each of the three major reporting agencies.

It is important to note that this statue applies to the opening of new accounts only and other exceptions are listed in Minn. Stat. 13C.016, subd. 6. And, finally this statue does not prevent current creditors, government entities, or private collection agencies acting under a subpoena, court order or warrant from obtaining credit information.

Although identity theft is on the rise, state and federal consumer protection laws afford consumers the ability to take affirmative steps to protect themselves. Regularly reviewing your credit card statements, checking and freezing your credit report and shredding those “pre-approved” offers are simple steps that can reduce your risk of becoming a victim of identity theft.

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