Credit freezes are one of the most valuable tools in your identity theft protection toolbox. When a credit freeze is placed on your account, lenders can't access your credit history to assess your risk and are unlikely to approve loans or other forms of credit.
You're in control. Unfreeze (thaw) your accounts whenever you want to apply for credit and re-apply the freeze when you're done. Thanks to recent legislation, all credit freezes and thaws are now free of charge, making them convenient for all consumers.
You probably know that you must apply individual freezes with each of the three major credit reporting agencies (Experian, Equifax, and TransUnion). You may also know to place a credit freeze with Innovis, the fourth and less-publicized credit reporting agency.
Did you know there's a fifth location where a credit freeze should be applied?
You may not have heard of the National Consumer Telecom and Utilities Exchange (NCTUE), but it plays an important role in preventing identity fraud. In essence, NCTUE is the equivalent of the credit reporting agencies for utilities like mobile phone carriers, cable/satellite TV companies, and electric/gas/water service providers.
Your credit report contains a record of all activities related to borrowing money. Your credit score is a single number calculated from that report. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.
Both show lenders the relative risk in lending you money, but you're not borrowing money from utility account providers – you're committing to regular payments for services provided.
If you miss enough payments that your account is sent to collections, the debt collection activity will show up on your credit report. However, the credit report won't show anything else regarding your utility account history. Utility providers trying to judge your creditworthiness don't get the full picture from credit reports or credit scores.
The dynamic may change with new scoring systems that allow you to share utility and banking information with the credit reporting agencies in exchange for a better assessment of risk. These systems are designed to help consumers who are responsible with money but have no credit history. Until then, NCTUE plays an important role in identity protection.
Just as a credit freeze prevents identity thieves from opening fraudulent credit accounts and taking out loans in your name, an NCTUE security freeze makes it difficult for identity thieves to open cell phone plans and utility accounts in your name.
Without that protection, fraudsters can open accounts in your name and refuse to pay, dropping your credit score when the defaulted account is reported. As with fake credit card accounts, you may not even be aware of the account until the damage is done.
For further information on the NCTUE and how to apply a NCTUE credit freeze, consult the NCTUE website or call NCTUE at 1-866-343-2821.
What about checking and savings accounts? They are also excluded from your credit report unless you have overdraft protection that is set up as a line of credit.
ChexSystems is the analogous agency that banks use to check your past banking history. You can set up a similar account freeze with ChexSystems on their website (technically not a credit freeze, since no credit is involved).
Credit freezes with the major credit reporting agencies will go a long way toward stopping identity thieves from opening new accounts in your name – but why not apply maximum protection? Make an NCTUE freeze part of your overall identity protection plan and consider your options with ChexSystems to prevent fraudulent savings and checking accounts.
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