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By Jason Alderman

Although the odds of having your identity stolen remain quite low, anyone who's ever been had their bank or credit card account compromised knows what a pain it can be to unravel the mess. Sometimes enterprising hackers just need your Social Security number, address and date of birth to start opening new accounts in your name.

Many victims don't realize anything's wrong until they apply for a new account and find their credit has been trashed; or, they start getting calls from collection agencies regarding unfamiliar accounts. More and more people have begun blocking access to information in their credit reports, even if there hasn't yet been any fraudulent activity, by instituting a "security freeze."

A credit security freeze is where you instruct the three major credit bureaus to disallow new creditors from viewing your credit report and score. Because most businesses won't lend without first checking your report, a freeze can deter identity thieves.

Before going to the trouble and expense of doing a credit freeze, however, learn how the process works and be aware of several possible inconveniences:

First, determine if you really need a credit freeze. If your credit or debit card is lost or stolen, you won't necessarily be a victim of identity theft, which usually requires additional personal information. Similarly, fraudulent billing charges don't necessarily indicate identity theft. Verify by reviewing your credit reports. You can order one free report annually from the three major bureaus through the AnnualCreditReport.com; otherwise you'll pay a small fee.

To freeze your credit reports, you must individually contact each credit bureaus: Equifax (www.equifax.com), Experian (www.experian.com) and TransUnion (www.transunion.com). You'll need to supply your name, address, birth date, Social Security number and other personal information.

Filing requirements and fees vary based on your state of residence (commonly $5 to $10). People over age 65 sometimes receive a discount and if you are an identity theft victim, credit freezes are free ā€“ although you'll need to provide supporting paperwork.

Once implemented, you'll receive a unique personal identification number (PIN) from each credit bureau. Store these PINs securely because you'll need them to temporarily lift a credit freeze and then reinstate it ā€“ usually for a fee.

All these fees can really add up, so if you're planning any action that requires a credit check, you may want to hold off implementing a freeze. It can take up to five business days to process a request for a security freeze or temporarily lift, so plan major purchases or other credit actions carefully.

A few additional facts about credit freezes: Although freezes can help block the creation of new credit accounts, they can't prevent an identity thief from making charges to existing accounts. Your current creditors can still access your credit reports, as can collection agencies acting on their behalf. Government agencies have access for collecting child support payments or taxes, to investigate Medicaid fraud, or in response to court or administrative orders, subpoenas or search warrants. You can temporarily lift a credit freeze either for a specific period of time, or for a specific party ā€“ say, a potential landlord or employer. If you lose your PIN, you may request a new one, although there may be a fee.

Bottom line: Always monitor your credit reports to spot errors or fraudulent activity. To take security a step further, consider placing a credit freeze on your reports.

Jason Alderman directs Visa's financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney

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