TransUnion to Offer Credit Freezes Nationwide

An anonymous reader writes "In a little-noticed press release issued Tuesday, credit reporting bureau TransUnion said it would begin offering credit freezes to all Americans, a change the belies the credit industry's oft-uttered claim that doing so would be too expensive and burdensome. The program takes effect Oct. 15, 2007, will cost $10 each to place and to remove, and request and must be filed by certified mail. As The Washington Post reports, the move comes as some 39 states and the District of Columbia have passed laws entitling their residents to credit freeze rights. The new right may have little benefit unless the other two major credit reporting bureaus follow suit, and both companies are staying mum about any plans to do so. In May, Slashdot examined a related story on the credit bureaus' traditional resistance to freeze laws."

Comments

Confused...

[Jennifer York]

I must have missed something... but how does freezing your credit history help with identity theft? And doesn't that defeat the purpose of having a credit history? I mean a history is used to determine if I pose a credit risk to the lender...

1) I ask to freeze my credit history
2) My history is frozen
3) ???
4) profit

Anybody able to distill this into simple terms for us?

Re:Confused...

[Alpha830RulZ]

I don't think this is accurate. This should increase the value of a credit score for the purchasers of credit scores, which are companies that lend money. This is a clear marker for a fraudulent loan application, which is one of the two precise things that lenders want to discover as they are processing a loan application (the other being a customer who is real, but nonetheless defaults on the loan). Credit Bureaus get money for returning a score for an account, generally about 10 cents a score. It doesn't cost them more, or reduce their demand to have a segment of customers marking their score as a do not lend value. From the credit grantor's standpoint, this is good info, and prevents them from getting scammed. Since the grantor's goal is to not loan money to people who don't intend to pay, they should want this information. The credit bureau still gets paid, and indeed should be able to charge more for a higher quality score. Everyone benefits.

It's quite possible that I'm being naive. But I do work extensively with these scores and their customers in my job, predictive modeling for financial services companies. I'm the dark side. I make these scores. If I could add this feature to a score, I'd get a bonus.

Re:Confused...

[ObjetDart]

I tried 2 different ways to stop the torrent of pre-approved credit card offers I was receiving in the mail:

1. Called the companies up and, after wasting endless time in the phone system, finally found someone who claimed to be able to remove me from the mailing list. This had no noticeable effect.

2. Started mailing back every single offer with "PLEASE REMOVE ME FROM YOUR LIST" scrawled across the acceptance form, in their own postage-paid reply envelopes. This was wildly successful. The mail stopped stopped almost immediately and hasn't resumed since, and that was a couple of years ago now.

Re:So what they really mean

[ucblockhead]

The amusing bit is that you need certified mail to place the freeze, but don't need certified mail to remove it. Interesting given that identity thieves would be interested in removing freezes, not adding them.

Pulling Credit Reports

[JRHelgeson]

In the past, prior to applying for a home loan, I had subscribed to credit reporting services at each of the 3 credit reporting agencies. I have had my user accounts set up for over 5 years with each of them. I quit paying for the services once the free AnnualCreditReport.com went up. Now I have been checking my credit annually. Apparently I wasn't the only one who quit paying for services they should be getting for free because they started scamming the consumers.

This year, I went to go pull my report from all 3 bureaus and none of them will let me see it - apparently because they "cannot adequately verify my identity", even though I've logged in with my same account information I've had with them for years. I enter my info; they'll ask me 3 questions about my credit past, which I correctly answer... then tell me I need to send my request via snail-mail.

HOWEVER

If I login and agree to pay $10, then they'll grant me access to the information, no questions asked.

This is a scam!

Re:Pulling Credit Reports

[JRHelgeson]

Okay, I just spent $10 to answer this question, so this post had better get modded UP! :)

I went to TransUnion, logged in, provided my buddy's credit card number (with his consent, I gave him $10 cash) and bought my credit report that they previously would not give me for free!

Any questions?

Experian won't answer its phone.

[arbitraryaardvark]

In theory you can get a free credit report from AnnualCreditReport.com, as required by federal law. Not to be confused with freecreditreport.com, which is free for $12.95 a month forever, a scam run by experian. My credit had been hit by an identify thief,and I've been trying to get some false info taken off my experian report. The online site didn't work. Calling the toll free number got me an automated thingy and no way to reach a live operator to explain what I actually needed, so today after a couple of weeks I got the form letter refusing to give me the report I'm entitled to under federal law, so I started calling, to try to reach a live human being.
No live response at the 1-877 number, just loops of answering machines that hung up after awhile.
So I called corporate at 714.830.7000, at 5:29 pm eastern. Operator hung up on me. Called back, same operator, wouldn't tell me her name, wouldn't put me through to a supervisor, kept sending me to an answering machine that after awhile of canned ads hung up on me. Went through this 4 times.

I've been meaning to email tony.hadley@experian.com> vp govt relations
Matthew Besler Public Relations Manager ("flack", not a real manager) Tel: +1 224 698 4415 Email: matthew.besler@experian.com, about this, to ask them why they don't answer their phones,
but I'm lazy and didn't get around to it.
So, experian, are you going to answer your phone next time I call?

Re:So what they really mean

[SuperMog2002]

These guys offer a service known as manual underwriting. Instead of using your credit score, they actually look at your income, assets, and expenses to determine your ability to repay. If you make decent money yet have a low credit score simply by not having any debt, they'll still offer you a loan.

It goes deeper than that

[swb]

It goes deeper than that. Companies you have credit with will extend you more credit than you think you have (often in the form of higher limits) not just because they like you, but because it can actually lower your credit score by making you more "at risk" for being in debt because you have access to credit.

This helps, say, your credit card issuer because you'll get fewer or less lucrative offers to switch to other cards because you are higher risk, but it also means you might pay a higher interest rate on things you DO want to buy on credit (like a car).

If you can freeze your credit, credit issuers can't silently over-credit you and drive up your cost of credit at the same time.

IMHO, the credit "industry" is a major racket which only appears to be a marketplace; the customers of the credit reporting clearinghouses are the lenders, and the lenders benefit from lower credit ratings and scores by being able to charge higher interest rates. The credit clearinghouses have ZERO incentive to have accurate records, fair correction policies or transparent scoring algorithms; their customer, the lenders, benefit from consumer-unfriendly policies through both higher interest rates and lender-leaning policies that treat borrowers suspiciously.

I don't know, but I've often speculated that the mortgage crisis, which is actually a bad-lending-policy crisis, happened because some renegade lenders figured out several years ago that the clearinghouses were manipulating data against consumers grossly enough that a market was being denied credit generally unfairly. Of course this blossomed into a get-rich-quick real estate bubble, but the technical origins were in our "traditional" credit markets being lender-skewed by the reporting agencies and non-traditional lenders exploiting this gap.

I'd like to see MUCH greater regulation of the reporting agencies, including mandating transparency of records (eg, I get access to everything you share/sell about me in whatever format you package it in), record freezing, banning scoring (force lenders to make decisions based on actual borrowing and payment histories) or at least making the scoring process totally transparent and subject to regulation (ie, queries alone can't lower your score, scoring only based on borrwing and payment histories), requiring a simpler challenge process with the burden of proof greatly shifted to lenders (eg, electronic-only records not in consumers favor MUST be removed if challenges, lenders must provide non-electronic proof of discrepencies, etc).

I'd also like to see credit reporting ONLY available to lenders, not to employers or landlords or anyone else not extending credit trying to judge personality or whatever they use it for.

Its just amazing how little control we have over our credit dossiers and how much influence it has over many details of life. You can get caught raping a 10 year old and win a million dollar settlement if the cop who arrests you even THINKS about smacking you, yet even if you're the best credit consumer in the world you can get dicked over by the credit reporting agencies with only the weakest of "rights" available to you.

Re:It goes deeper than that

[Libertarian001]

You've made some interesting points, and generally speaking I'd agree with you about new legislations, system transparency, et al. Then it dawns on me: Why exactly does this for profit corporation think that they have any right to 1) track my financial transactions*, 2) sell that information to anyone and everyone, 3) make no effort at accuracy and actively fight against the people they're tracking and 4) charge me to view the records they're keeping on me without my permission?

*A few transactions are actually a matter of public record, like real estate. Note, however, that how something is financed is a private affair and is generally not publicly available (unless it's something like a city building a ball park).

As to what the lack of information on my credit worthiness would do to the credit-lending industry... I would submit that that industry is the cause of a rather large problem in the U.S., much the way a crack dealer regularly supplying a drug addict is a problem.

On a side note, this industry is entirely jacked up. Sure, rich people "deserve" to have nice low rates on their loans. That said, artificially increasing the rate on people with a lower score makes it that much more likely that someone who already has a hard time re-paying the loan will default. Obviously if you can't afford it then you shouldn't be buying it. I refer you to the crack analogy above.

Re:Already available for free?

[DaveAtFraud]

I'm quite happy with what P.J. O'Rourke has to say. Different peoples have differing expectations as to what the government should and should not do. The French, Sweeds, etc. have an expectation of the government taking care of them (see also socialism). A goodly number of people in the U.S. see such cradle to grave care by the government as a tax on those willing to take risks and/or take care of themselves. Neither is right or wrong; just different approaches to the problem that suits the temperament of different people. You should also note that the new French president is attempting to dismantle some of the social support structure since they don't seem to be able to afford it.

You might also look a little more closely at countries with socialized medecine like Canada and the U.K. Those with money leave to get the care they need in a timely manner. Those who can't afford to leave sometimes die waiting for facilities and tests that are considered routine in this country. Yeah, they may have a lower infant mortality rate but don't get sick with something that requires specialized treatment (unless you can afford to pick up the tab yourself possibly after some travel).

Cheers,
Dave

Identity clearinghouse

[Dachannien]

I've been a proponent for quite some time of an "identity clearinghouse" - an independent government-funded organization to which you could optionally submit your current contact information for the purposes of verifying your identity. Credit offerors (banks, CC companies, etc.) would be required by law to check with the clearinghouse before they could open a line of credit for anybody. The process of signing up for the clearinghouse or of changing one's information would have to be done in person at one's local DMV, where in nearly every state they already have computer photo records of everyone who has a license or ID card.

The clearinghouse would take the lender's verification request, determine whether the purported credit applicant was listed in the database, and if not, they would respond that the person isn't listed. The lender could then open the line of credit. If the applicant is listed, then the clearinghouse attempts to contact the applicant using the contact information on record to verify the request, first by phone, then by mail (the applicant could also request only to be contacted by mail, or could request that all verifications be denied until further notice). If the applicant verifies the credit request, then the lender is notified with a simple "yes" and can then open the line of credit. Otherwise, the lender is notified with "no" and is forbidden from offering credit under that application.

Any lender found to have opened a line of credit for a person who refused to verify a credit request would become fully liable for that line of credit. The reporting agencies would be required to remove the credit line from the person's records. Any legal costs incurred would also become the lender's responsibility.

The system would be funded via a fee charged for every verification request.

This wouldn't solve all identity theft problems. For example, if someone steals your credit card, you're still on the hook (at least as much as your credit card issuer doesn't cover). It wouldn't necessarily cover interception of one's mail. But it would make mass ripoffs of PII useless.

Disable all services you don't use

[iangoldby]

It seems to me that a credit freeze is similar to the system administrators' principle that you don't leave running services that you don't need. If you get no benefit from a service, why accept the risk that it poses, even if that risk is very small? Similarly, if you don't need credit, why make it even possible for someone else to get credit in your name?

Here in the UK, someone by the name of Jamie Jamieson came up with a way to exploit a UK law that says that everyone has a right to place a "Notice of Correction" in their credit report, which lenders must take into account when they assess your credit. Full details are given at http://www.freeidprotection.co.uk/ but in short, you send the three UK credit agencies a notice of correction stating that any application for credit by you will be accompanied by your thumbprint, and that any application not accompanied by your thumbprint should be considered fraudulent.

It's important to note that the credit agency is not expected to verify that the thumbprint is yours. But most fraudsters would not know in advance that a thumbprint would be necessary, and certainly would not want to supply their own...

I have no idea whether this would work in the USA.

Re:So much fuss, so little problem.

[seebs]

Right now, there's some ambiguity, and some grey areas, and I believe they are allowed to get away with demonstrating only that they had a good-faith belief. I want them to have to prove that the belief was correct. Right now, it's up to the victim to establish that there was identity theft or whatever.