Identity theft is on the rise. According to Consumers Union , more than 8 million Americans are victimized by identity theft each year.

Credit freezes protect us from identity theft by restricting access to our credit reports. When you apply for a loan or credit card, the bank or credit card company you apply to will check your credit history to see how much other debt you owe and whether you have been paying your debts on time. The way they check is by pulling your credit report from one or more consumer reporting agencies (CRAs).

Placing a credit freeze with the CRAs makes it much harder for an identity thief to open a fraudulent account in your name. Bank and credit card companies won’t issue a loan or credit card if they can’t access the applicant’s credit report (at least in most circumstances).

Under existing law, you have to pay a fee to to each of the three nationwide CRAs (Equifax, Experian and TransUnion) if you wanted to place a freeze on your credit report. You were also required to pay an additional fee if you wanted to “unfreeze” your credit report at a later date. The cost for Massachusetts residents to both freeze and unfreeze their credit reports was $5.00 under the present law (there was no charge for identity theft victims).

But starting this Friday, September 21st, all US consumers will be able to freeze and unfreeze their credit reports for free under a new federal law  that amends the Fair Credit Reporting Act.

The new law requires Equifax, Experian and TransUnion to each set up a webpage where consumers can request credit freezes. I strongly urge anyone reading this post to take advantage of the new law. It’s also a good idea to request credit freezes for your kids if they are minors.

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