Several states permit you to freeze your credit report which prevents identity thieves from posing as you and being issued credit in your name. Vermont, Washington, Illinois, Texas, California, Louisiana, New York, New Jersey, Maine, North Carolina and Colorado only allow credit freezes if the credit fraud has already occurred.

All fifty states allow you to place a fraud alert on your credit report. Before you can receive approval for credit cards, loans or any other type of financing, creditors must contact you for your permission. However, there are no laws to enforce creditors to follow through with the protocal. Even with the credit alert, someone could be issued credit in your name if the credit card checks your credit history and grants approval for financing.

It should work this way: a frozen credit report prevents credit being opened in your name. Lenders, insurers and employers should not have access to your credit report. This halts identity theft because even with all your personal information: social security number, mother's maiden name and so on, the freeze will lock them out from viewing your credit report.

But there will be some lenders or employers you will want to allow access to your credit report - in this case the three major credit reporting agencies will authorize a PIN number that "melts" the freeze for that person.

You can freeze your credit report for free in most states if you have already been victimized by credit fraud or identity theft. You'll need to freeze your report at all three major credit reporting agencies at about $10 each for credit fraud prevention. A worthwhile investment.

It's also free to lift a credit freeze permanently, but it does cost to temporarily unfreeze your report for certain individuals to access it, and this fee varies from state-to-state.