You can shut out ID thieves before they cause damage by placing a security freeze on your credit reports at all three major credit bureaus: Equifax (www.equifax.com); Experian (www.experian.com); and TransUnion (www.transunion.com). It will prevent anyone from looking at your credit report except for the companies that already have a financial relationship with you, certain government agencies, and other exempt entities. To sign up for one, go to each bureau's home page and look for the security-freeze link.
If a lender can't pull your credit report, it isn't likely to grant new credit to someone else in your name. So a security freeze is an excellent deterrent against fraud. But like all deterrents, it isn't fail-safe. "Some creditors, such as payday lenders, will give credit without getting a credit report," says Rebecca Kuehn, assistant director of the Federal Trade Commission's division of privacy and identity protection.
If you haven't placed a security freeze and you spot a sign of identity theft, put an initial fraud alert on your credit report immediately. That's fast, free, and stays in place for 90 days. It also gives you additional legal protection. After that, request a security freeze.
Prospective lenders are supposed to see a fraud alert on your credit file and call you to find out whether the application is legitimate. Filing a fraud alert is appropriate anytime your identity information is compromised, such as when your wallet, cell phone, or computer is lost or stolen, or if your home or car is broken into. But you should also do it after more-subtle warning signs, such as finding unauthorized charges on your credit-card statement (even if quickly resolved) or failing to receive expected bills or mail.
Fraud alerts are free; security freezes typically cost $5 to $10 per person per credit bureau each time you place or temporarily lift one. Prices range from free to $20 depending on state law. But if you're a victim of ID fraud, freezes are usually free. You can initiate a freeze online directly with each credit bureau; for fraud alerts, you only need to inform one bureau, which will pass the request on to the other two.