The project is sold, and includes financing. Now the sales rep heads to the car, where he will quickly contact the organization that offers loans to customers. That organization will, in turn, contact credit bureaus to ensure that the client is a worthy credit risk.

A few minutes later the lender calls back. The customer has had a “freeze” placed on his credit file. Now what?

FRAUD PREVENTION At the moment, you're only likely to encounter that scenario if you do business in one of the 38 states that have enacted laws enabling consumers to block credit reporting agencies from releasing their personal information without written consent.

Beginning with California, in 2003, states have used credit freeze legislation to control the explosion of identity theft, which now costs banks and consumers some $60 billion a year. So far, nearly 700,000 consumers have opted to freeze access to their credit accounts.

The state laws, and the possibility of federal legislation, have caused concern among lenders that specialize in home improvement financing, and among home improvement companies that rely on selling financing to move a large percentage of their deals.

“It could be devastating,” says Bruce Christensen, vice president for GE Retail Sales Finance, in Dallas. The reason, he explains, is that if the customer currently has a freeze on his or her credit, “the contractor will no longer be able to get approval in the home.”

D.S. Berenson, an attorney who represents many large home improvement companies, notes that “placing a freeze on your account, and lifting it, and placing it on again, is currently a clunky process that can take days, if not weeks.”

ANOTHER DNC LIST? John Anderson, compliance leader for GE Consumer Finance, believes that some kind of federal legislation will be enacted in 2008. At the moment, several proposals are being floated, among them a bill that would leave stronger state legislation intact.

Ed Mierzwinski, an attorney with the federation of state Public Interest Research Groups (U.S. PIRG) gives such legislation a 50% chance of passing and says that more and more states are leaning toward a credit freeze open to anyone, with no fees charged, and which would include a 15-minute thaw period, activated by a PIN number. That would enable consumers to make those large purchases, with just a few minutes' delay. For a law to pass, and to work, Mierzwinski says, “it must be consumer-friendly and business-friendly.”