Protecting one’s credit while in the criminal justice system
Checking your credit report regularly and making sure the information is correct is an important part of building and maintaining healthy credit. For incarcerated individuals, monitoring personal accounts or credit reports can be a challenge. Individuals who can’t monitor their credit reports could face an increased risk of fraud or identity theft. Errors or other problems on a credit report can create a barrier for those seeking employment or housing, accessing credit, and can lead to other financial difficulties.
Through consumer complaints, we have heard that some
individuals have encountered problems with fraud or other misuse of their identity
or accounts while they were incarcerated. Some problems include:
- Errors on credit reports: It’s important to regularly review your reports for errors, and everyone has a right to request a free annual credit report from each of the big three nationwide credit reporting companies. However, when a person is incarcerated, it may be difficult for them to request and review their credit report.
- Identity theft: When a person is incarcerated or otherwise not actively using and monitoring their credit, they are at risk of identity theft. If access to credit reports and the ability to correct errors is difficult, they may not be able to prevent, discover or address fraudulent activity on their accounts.
Protect one’s credit
In response, today, we are releasing our identity theft and fraud protection tips for individuals in the criminal justice system . This tip sheet can help currently and recently incarcerated consumers protect their credit files and help eliminate unnecessary barriers to a successful transition to jobs or housing after these individuals serve their sentence. Initiating a security freeze or fraud alert on one’s credit file prior to or while they are incarcerated can help protect them from financial harms and is one way to get a fresh start upon release.
- Security freeze: If a person wants to prohibit the release of their credit file to potential new lenders, they may want a security freeze. The security freeze will stop these lenders from accessing their credit file, which would prevent them and others from opening new credit accounts in their name. Requirements and fees to set up a security freeze vary from state to state.
- Fraud alert: A person can place an initial alert or extended alert on their credit file if they suspect they have been or will be a victim of identity theft or fraud. These fraud alerts help notify lenders that they need to verify the identity of the person requesting the credit. Setting up this alert is free.
Of note, not all companies that lend money use credit reports to verify identity and creditworthiness. After someone is released, they should make sure to check that they are not receiving suspicious mail or other communications from companies – including retail stores – about credit that they didn’t request. The identity theft and fraud protection tips for individuals in the criminal justice system tip sheet explains how they can protect their credit and choose the protection that will work best for them.
If you or someone you know is having a problem with credit reporting, or another financial product or service, submit a complaint for free at www.consumerfinance.gov/complaint, toll-free at 855-411-2372, or by mail:
Consumer Financial Protection Bureau
PO Box 4503
Iowa City, IA 52244
Take a look at more information about credit reports, credit scores, and other financial topics on AskCFPB.