Putting a freeze on your credit

NEW YORK (CNNMoney.com) -- By the end of the year, consumers in all 50 states will have a new weapon in preventing identity theft - credit freezes. We'll tell you if this protection is worth the time...and the money.

A security freeze gives consumers the choice to "freeze" or lock access to their credit file against anyone who may be trying to open up a new account or to get new credit in their name. When a security freeze is in place at all three major credit bureaus, an identity thief cannot open a new account.

Now, if you want to apply for credit, you'll have to unfreeze your account using a PIN number. But by the end of this year, all three credit bureaus - TransUnion, Experian and Equifax - will let consumers freeze their credit reports.

TransUnion is first, making its credit freeze available Monday. Experian indicates its service will take effect in November. And Equifax also plans to make the service available soon, but hasn't announced details.

Freezing your credit is the biggest step a consumer can make in protecting identity. But the costs are high. First, you'll have to freeze your credit report at all three credit bureaus, not just one. And that will likely cost you $30.

Then if you want to apply for a car loan, or a mortgage, or even a credit card, you'll have to pay another $30 to unfreeze your accounts (that is unless you live in a state like Montana, New Jersey or New York that have mandated lower fees.)

Plus, you'll have to plan ahead if you think you're going to be applying for credit. It could take up to 3 days to get all of your credit reports unfrozen.

No...not now. Here's why. There's a good chance the credit bureaus will streamline the freezing and unfreezing process so you'll only have to go to one place and you'll likely see lower rates, according to John Ulzheimer of Credit.com. That may only take another 12-18 months, he says.

There are simple things you can do to curb your risk of identity theft, like shredding your documents, opting out of junk mail and keeping your social security number private at all times. But if you've already been the victim of an ID theft, these services from the credit bureaus are free, so take advantage.

"The identity thief probably still has some information on the victim, and they may try to sell that info," says Ulzheimer. If you live in an apartment building or you're a student that uses a community of mailboxes you may want to consider a freeze, since your risk of ID theft is greater.

You can put a credit alert on your credit records. A credit monitoring service will alert you when there are inquiries into your account or any new accounts that are opened in your name. Credit monitoring services can cost from $10 to $35 a month.

Make sure you choose a service that monitors all three credit bureaus. Check out truecredit.com or you can go to the major credit bureaus to comparison shop and get more information.