Guard your credit rating

By TED GRIFFITH

Since the end of September, under a new state law, Delawareans have had the right to sign up for a credit- report "freeze," a protection against identity theft.

But, having the right to sign up is different from getting it all done.

George Fitzgerald, a volunteer lobbyist with the Delaware Credit Union League, which pushed for passage of the Delaware credit-report freeze, said the process of establishing the protection is cumbersome.

Fitzgerald, of Greenville, said he couldn't estimate the number of Delaware residents who have frozen their credit reports since the law went into effect Sept. 29, but added that it's probably just a few people because of the bureaucratic hurdles consumers have to clear before they can sign up. Still, Fitzgerald said, if you're "patient and detailed," you'll be able to get the protection.

"It is do-able," said Fitzgerald, who recently sent off his applications for the freeze.

Before signing up, it's important to understand what the measure does. By setting up a credit-report freeze, you will prohibit the major credit bureaus -- Equifax, Experian and TransUnion -- from releasing your credit information to lenders unless you supply a personal code.

Your credit report reflects your track record for paying bills and the amount of your outstanding debt. Lenders typically will not make loans or extend any form of credit unless they first have an opportunity to review your credit report, which is seen as a crucial indicator of your creditworthiness.

That's where the credit-report freeze comes in. Even if a fraudster has your Social Security number and date of birth, he or she wouldn't be able to take out a loan or open a store charge account in your name because the lender wouldn't be able to review the frozen credit-report information, Fitzgerald said.

"I call it a vaccination against fraud," Fitzgerald said.

Still, consumers who exercise their right to implement the freeze will have to contend with inconvenience. Once you've signed up, you will have a waiting period of three business days to unlock the information. That could impede such practices as signing up for a retail-store charge card, arranging for electric service to a home or getting insurance.

Lenders aren't the only ones who rely on credit reports -- utilities, insurance companies and even prospective employers -- also like to review them. Delaware law mandates that the three-day lag to thaw credit-report information shrinks to just 15 minutes by Jan. 31, 2009. But, for now, the credit bureaus have three business days to release your information when you need it.

It also involves an expense. A credit bureau will charge $20 per person to set up the freeze. For a couple, that would be a total of $120 for all three credit bureaus. However, consumers who have been victims of identity theft can sign up for the freeze at no cost, although they'll have to provide a police report to demonstrate they're eligible for the fee waiver, Fitzgerald said.

Once you've established the freeze, there is no cost to unlock your credit information temporarily so you can, say, apply for a loan.

Even if consumers do put a freeze on their credit information, they shouldn't set aside worries about identity theft, said Donald W. Nicholson Sr., a financial planner in Brandywine Hundred. Nicholson said no protection is perfect and recommends that his clients regularly check their credit reports so they can catch fraud or errors early. Mandated by federal law, consumers can get free credit reports once a year from the three major credit bureaus by visiting www.annualcredit report.com or calling (877) 322-8228.

Fitzgerald also recommends a regular credit-report review. He said it's smart to have your report in hand when you set up the freeze because the reports provide phone numbers so that you can call the bureaus with questions or complaints.