America's number one crime, Identity Theft! Would you believe in the time it takes you to count to ten, five new people will fall victims to this crime? It's amazing!  And according to the U.S. Department of Justice, identity theft is now passing drug trafficking as the number one crime in the United States.  Unfortunately, more than 15 million people will be victimized this year alone.

If you are concerned about protecting yourself, you can actually take some steps by requesting a credit freeze (also known as security freeze). Essentially, a credit freeze gives you the ability to "freeze" or lock access to your credit report.  By doing this, you will prevent anyone from opening a new account using your name.

How It Works

When a thief tries to open an account using your name, they will be stopped before they even begin. What do we know about applying for a new loan?  The first thing any creditor will do before opening a new account is to run a credit report.

By requesting a credit freeze, creditors will not be able to run your credit report. And, since most creditors will not issue a new loan without first seeing your credit report, identity thieves will not be able to open fraudulent accounts using your good name. But, what happens when you want to apply for a new loan yourself?  You can request a temporarily lift on your credit freeze using a secure PIN number... thus, allowing your application to be processed.

There is a Down Side

It's important to first know that a credit freeze only prevents thieves from opening fraudulent accounts. It does not stop them from using your lost or stolen credit cards. So you still need to keep the phone numbers of your credit cards companies handy.

Some critics contend that a credit freeze will have more draw backs than most people realize. Such as, you will not be able to purchase a car, obtain a new credit card, or refinance a mortgage at the drop of a hat.  Impulse buying will not be available. So you will need to plan ahead by suspending your freeze and that can take up to three days.

However, for most major purchases, this should not be an issue. How many of us will buy a new car or a house without first thinking about it? Most of us start looking around first and, at that point, we can easily lift the credit freeze in anticipation of making a purchase. However, a credit freeze can present a problem if you are shopping at a retailer and the cashier offers you 10% off your purchase when you open a new credit card.

Alternative Options

Still critics of a credit freeze argue that anyone can just as easily fight identity theft with fraud alerts.  This would require a creditor to verify your identity before issuing new credit. If you think you might be a victim of identity theft, you can obtain a 90-day fraud alert. And if you provide reliable proof that you are in fact a victim, then a police report can extend your fraud alert for up to seven years.

There is a problem with this method though... fraud alerts only come into play AFTER you have been victimized. So for many people, a credit freeze offers more protection and more peace of mind.

But Here's the Kicker... You May Not Have a Choice!

Believe it or not, a credit freeze is not available in every state. Some states still need to approve a credit freeze law. Why you ask? It boils down to a battle between retailer's very profitable instant credit offers and the increasing need for higher security of personal information.

Unfortunately, billions of dollars are at risk in this battle! Retailers generate massive revenues streams through their instant in-store credit cards.  Obviously this increases profits through consumer interest and increased shopping. However, we as consumers are part of the problem too.  We as a society have simply grown accustom to receiving on-the-spot credit approvals for our purchases.

To learn more about these issues and to find out if your state allows credit freezes, visit www.ConsumersUnion.org/finance/creditfreezeinfo.htm.