By Joan Honeycutt, Vice President, Onarga Facility
Identity theft is a major concern. If you have been the victim of identity theft (or know someone who has), you are aware of the disastrous consequences of this crime. Many of us take steps to protect ourselves from the threat of identity theft, like protecting your passwords and shredding all documents that contain sensitive personal data. But you may not be aware of a security freeze (or credit freeze) and how it can help you to protect your identity and your assets.
What is a Security Freeze? As the name implies a security freeze allows you to “freeze” your credit. It seals your credit report and prevents any attempts to establish new lines of credit in your name.
How Does a Security Freeze Work? When you apply for a security freeze, you will receive a 4-digit password. This password becomes the only way to turn off the freeze. Thus, since you are the only one who has this password, you are the only one who can authorize the establishment of new lines of credit. By instituting a security freeze with all three credit bureaus (Equifax, Experian, and TransUnion), you effectively prevent thieves from being able to rack up debt attached to your name.
What Does It Cost to Request a Security Freeze? The cost of freezing your credit varies from state to state, but in Illinois it currently includes a $10 fee for each credit bureau. However, the service is free if you have been a victim of identity theft, if you are 65 or older, or if you are an active duty military service member.
How Does a Security Freeze Affect Existing Lines of Credit? Existing lines of credit are unchanged by this action. If you already have a credit card, you can still use it up to its existing credit limit.
What About Legitimate Credit Needs? After you have implemented a security freeze, you may from time to time have the need for additional credit. When this occurs, you can have the freeze temporarily lifted or you can have the freeze removed completely. Depending on your circumstances, there may be a fee associated with this action.
Is a Security Freeze Right for You? In order to answer this question, you need to look at your particular situation. If you are at a high risk for identity theft or have already been the victim of this crime, then the answer may be yes. On the other hand, if you anticipate the need to access your credit report or apply for new lines of credit in the near future, then this may not be right for you. For more specifics, see the Illinois State’s Attorney’s informational page.
Credit can be a useful tool in building a business, purchasing a home, or financing other endeavors. At Federated Bank, we have a team of experienced lenders that can help you evaluate your needs and select the credit option that works best for you. We offer a variety of mortgage options and auto loans as well as business and farm loans and lines of credit. Stop by and talk with a loan officer anytime during our regular business hours.
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