Dave Says: Freezing Your Credit Report

By Dave Ramsey

CBN.com – These days it pays to be smart about money. That's why it's important to take this wise counsel from financial expert Dave Ramsey.

Dear Dave,

Do you recommend a credit freeze in order to protect against identity theft?

Eric

Dear Eric,

I absolutely recommend doing that, especially if you're not borrowing money anymore. However, putting a freeze on your credit report only provides partial protection against identity theft.

Identity theft is where someone, for example, signs up for a credit card in your name. If Joe Crook signs an application with your name and address, and the credit card company issues the card without checking —they blind-issue cards about seven out of 10 times — then the card will be issued to the thief. Having your credit frozen does nothing to stop that from happening. Still, if they check your credit and it's frozen, chances are they won't issue the card.

I'd also recommend having a good identity theft protection program in place. I have it on myself and all my team members at the office. If you don't have this, and someone gets a card in your name, the credit card company will demand that you pay the bill. You can insist it's not you, but that won't do much good. Then, you'll have to go through the hassle of filling out affidavits and police reports.

You may get out of paying for it in the end, but you'll still have to spend dozens, if not hundreds, of hours dealing with the credit card company trying to get the whole mess straightened out!

—Dave

* Dave Ramsey is America's trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.