BANKRUPTCY UPDATES

Equifax Introduces Option to Freeze Credit Report

Bankruptcy happens. Whether caused by divorce, lawsuits, identity theft, serious illness, foreclosure or something else, it can wreak havoc on the lives of those affected.

Luckily, the credit industry is taking steps to potentially prevent some people from filing bankruptcy.

TransUnion, one of the three major credit bureaus, began offering credit report "freezes" for a $10 fee. The freeze was created as a measure to prevent identity theft, according to the Atlanta Journal-Constitution. Those who wish to deny access to their credit information simply contact TransUnion and pay the fee. To unfreeze, there's another $10 charge.

Those who have already been victimized by identity theft can use the service for free.

But consumer activists are reportedly unsatisfied. Apparently, some claim that security measures like this will only be effective if offered by all three credit bureaus.

Otherwise, according to the Journal-Constitution, consumers won't really be protected: even if their information is frozen with one bureau, identity thieves could still access it from another.

Luckily, Equifax, based in Atlanta, has reportedly stepped to the plate.

Equifax plans to offer a similar service, starting late this month, sources say. And Experian, based in California, supposedly has plans in the works that could take effect by the end of the year.

So why weren't these measures enacted right away?

Apparently, some credit freeze opponents don't believe the freezes can actually prevent identity theft. And even if they could, the argument allegedly goes, few consumers are taking advantage of them.

Some entities were reluctant to get on board because of worries about consumer flexibility. The Georgia Retail Association (GRA), for example, supported credit freeze service only when the unfreezing process was streamlined, the Journal reports.

This was mainly because of the GRA's interest in promoting retail transactions. Most creditors will not open lines of credit without first checking your credit background. This includes store-specific credit cards, which are often offered with a significant one-time discount to new applicants.

For those who need emergency, big-ticket items, the potential savings would be unreachable if credit reports were frozen. According to the Constitution-Journal, this was a major concern for the GRA.

Now, consumers can unfreeze their credit reports over the phone, in about 15 minutes, which means last-minute purchases should be within reach. Getting car loans financed should also prove feasible with the 15-minute unfreeze.

So what does this mean for you? Make sure that you do your homework and thoroughly understand the credit freeze process and its effects before you make a decision.

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