To protect people with disabilities, consider credit 'freeze'

Last week, I introduced you to Lisa and to a problem facing many families of people with disabilities.

She wrote to tell me that her brother suffers from bipolar disorder that is managed by medication. However, despite his limitations and small monthly income, he has managed to rack up about $6,000 in credit card debt.

Lisa wanted to know whether there was some way to put a notice on his credit report or take other steps to keep companies from issuing credit to him.

I finished my personal rant on this topic last week, so it's time to get the help of an expert to answer Lisa's question. Enter Mike Peterson, spokesman for American Credit Foundation in Midvale.

Mike says there are a few things Lisa's family can do to prevent creditors from issuing her brother new credit. To take these steps, they will need access to his Social Security number and personal financial information.

First, Mike says, each of the three credit reporting agencies allows a "user comment" on reports.

"Typically, this is used by individuals that are trying to explain why their account is showing a 'rocky' credit history, or unexplained errors," Mike says. "They could use this option to indicate that the individual is somewhat incapacitated and has only a $100 monthly income, and that 'creditors beware' and issue at their own risk."

The easiest way to place such a comment, Mike says, is to pull credit reports from each of the agencies. As I have written before, those reports are available free at www.annualcreditreport.com.

"Once they have pulled the report, most of these contain links to place a comment," Mike says. "They might have to actually write it down and send it in, depending on the different policies of the agencies, but the directions to do that will also be included in the reports. The potential downside with this is that not all creditors will consider the comments before issuing credit, so it won't guarantee that new credit won't be issued."

The second option, which could be used along with the first, is to add "security freezes" to all three credit reports.

"Security freezes are designed to prevent a credit reporting company from releasing your credit report without your consent," Mike says. "Basically, with a security freeze on the credit report, a potential creditor will not be able to see the credit report, and therefore will not issue credit.