This is the first installment in a three-part MoneyLine series focusing on some changes that Rhode Islanders will face in the new year.

Starting tomorrow, Rhode Island consumers will be able to place a “security freeze” on their credit files, a step that should help combat identity theft.

It’s the result of legislation that was approved by the General Assembly and signed into law by Governor Carcieri earlier this year. A key provision of that law kicks in tomorrow. Following are some highlights:

•What’s at Stake: This issue involves your credit file, also known as your credit report. It’s the official record of your personal credit history. It includes information on your car loans, mortgage loans, credit card accounts and other items.

Three big credit-reporting companies — Equifax, Experian and TransUnion — keep credit files or credit reports on millions of Americans.

If you tell a credit-reporting company to place a security freeze on your credit file, the company can’t release information in that file to lenders.

Because most lenders won’t issue credit without first looking at your credit file, freezing the file can prevent identity thieves from opening new accounts in your name.

“The security freeze is designed to prevent credit, loans, and services from being approved in your name without your consent,” state law says.

Michelle Jun, a staff lawyer for Consumers Union, the nonprofit organization that publishes Consumer Reports, said that a security freeze “is one of the most useful tools for consumers to utilize … to protect themselves” against identity theft.

Rhode Island is one of only about 25 states that allow for security freezes (sometimes called “credit freezes”).

•A Downside: Blocking access to your credit file is the chief benefit of a security freeze. It can also be the chief drawback.

With a freeze in place, for example, you may not be able to take advantage of “instant credit” offers that lenders may make available to you by mail or in stores — even if you consider the offers appealing.

If you want to give a lender access to your credit report, you can tell the credit reporting company to lift the freeze, either temporarily or permanently. But that could still result in unwelcome delay.

“If you are actively seeking a new credit, loan, utility, telephone, or insurance account, you should understand that the procedures involved in lifting a security freeze may slow your own applications for credit,” according to a sample notice contained in the law.

What to do? If you put a security freeze in place, make sure you lift the freeze before you go hunting for credit. In other words, plan ahead. You can lift the freeze for a specific lender, or have the freeze lifted completely to give a number of lenders access.

•Fees: State law allows a credit-reporting company to charge you a fee for either implementing a freeze, temporarily lifting it, or removing it permanently.

But you can’t be charged any such fee if you’re 65 or older, or if you’re a victim of identity theft and have proof that you filed an incident report or a complaint with a law-enforcement agency.

If you don’t meet one of these exceptions, you can be charged a fee, but the fee is capped, by state law, at $10.

Each credit-reporting company has its own policy as to how fees are applied.

For example, Experian charges a $10 fee to implement a freeze, but no fee to temporarily lift or remove a freeze, an Experian spokeswoman said.

TransUnion charges a $10 fee to implement a freeze and $10 to temporarily lift a freeze, but no fee to remove a freeze altogether, a TransUnion spokeswoman said.

Equifax charges a $10 fee to put a freeze in place and $10 to temporarily lift a freeze, but no fee to remove a freeze entirely, an Equifax spokeswoman said.

•Placing a Freeze: To activate a security freeze, you must send a letter by certified mail to each credit-reporting company, using the following addresses:

•Experian Security Freeze, P.O. Box 9554, Allen, TX 75013.

•TransUnion Security Freeze, P.O. Box 6790, Fullerton, CA 92834.

•Equifax Security Freeze, P.O. Box 105788, Atlanta, GA 30348.

Consumers Union recommends that you include the following in your letter to each credit-reporting company:

•Your full name, address, Social Security number, and date of birth.

•Prior addresses if you’ve moved in the past five years.

•Proof of your current address, such as a copy of a current utility bill or phone bill.

•A photocopy of a government-issued ID card, such as a state driver’s license or ID card.

•Payment of the applicable fee — by check, money order or credit card (Visa, Master Card, American Express or Discover cards only).

Once the company processes your request, it must send you written confirmation. It must also supply you with some sort of password or code number for you to use later on, in case you want to temporarily lift or permanently remove the freeze.

•More Information: Consumers Union has a Web site that includes information about Rhode Island’s security-freeze law:

FinancialPrivacyNow.org

(At the top of the screen, click on the “Learn More” button. Then click on the link titled, “See if your state has a security freeze. …”)

For more details — including a list of government agencies and others that can still gain access to your credit report despite a security freeze — read the law itself:

www.rilin.state.ri.us/statutes

(Click on Title 6, “Commercial Law — General Regulatory Provisions,” then Chapter 6-48, “Consumer Empowerment and Identity Theft Prevention Act of 2006”.)

For more details on the new Rhode Island law, see the two-part MoneyLine series Sept. 3 and Sept. 4.

•Coming Tomorrow: A reduction takes effect for Rhode Island’s capital-gains tax.

Neil Downing is a Journal staff writer and author of The New IRAs and How to Make Them Work for You. Questions about your money matters? Call us at 1-401-277-7484 and leave a message, or e-mail:

moneyline@projo.com

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