Fraud Alert vs. Credit Freeze: Which One Should You Use?

Having your identity stolen is an invasive experience -- and an increasingly common one. Common examples of identity theft include having a bank account accessed or new credit line opened without authorization. And reports of identity theft increased by 45% in 2020 from the year prior, driven in large part by scammers attempting to cash in on government stimulus checks and other benefits made available in response to the coronavirus pandemic.

Despite the bleak data, there is good news: There areeasy ways to protect your identity. Two of the most commonly used tools are fraud alerts and credit freezes. And while they each enhance the security of your identity, there are key differences between them. Read on to learn more. 

What is a fraud alert?

A fraud alert is a self-imposed warning placed on your credit record that requires any lenders or financial institutions to contact you before opening any new lines of credit in your name. While they don’t prevent new accounts from being opened in your name, they do provide an extra security step.

There are three primary types of fraud alerts:

• Fraud alert: The standard alert lasts for one year and can be renewed as often as necessary. Anyone can place a fraud alert on their account -- even if they have not fallen victim to identity theft.
• Extended fraud alert: An extended fraud alert operates like a fraud alert, except it lasts for seven years. Extended fraud alerts are only available to people who have been victims of identity theft. In order to qualify for an extended fraud alert, you have to file a report on the FTC’s IdentityTheft.gov site or with the police. Once placed on your account, credit bureaus will remove you from marketing lists for credit and insurance offers for five years -- though you can request to remain on these lists if you choose.
• Active-duty fraud alert: Available exclusively to military service members, active-duty fraud alerts last for one year, but can be renewed for as long as you are deployed. When you place an active-duty fraud alert on your account, credit bureaus will remove you from marketing lists for two years, though you can opt in if you wish.

When to set up a fraud alert

Whether someone has actually attempted to steal your identity or you just want to use an alert as a preventative measure, it’s an effective way to protectyour identity and credit.

If you learn that your personal information has been exposed in a breach, a fraud alert is a helpful tool to protect against potential identity theft. If you have reason to believe someone may have access to your information, use that extra step of verification to make sure no new lines of credit are opened in your name without your permission.

How to set up a fraud alert

Setting up a fraud alert requires informing the three major credit bureaus -- Equifax, Experian and TransUnion -- that you would like to use this tool to protect yourself. You only have to contact one of the three credit bureaus, as they are required to contact the other two for you and inform them of the fraud alert.

You can contact any of the credit bureaus and set up a fraud alert online or via phone call.

Equifax

• https://www.equifax.com/personal/credit-report-services/credit-fraud-alerts/ 
• Phone: 800-685-1111

Experian

• https://www.experian.com/fraud/center.html 
• Phone: 888-EXPERIAN (888-397-3742)

TransUnion

• https://www.transunion.com/fraud-alerts 
• Phone: 888-909-8872

What is a credit freeze?

While a fraud alert requires verification before opening any line of credit in your name, a credit freeze is even more stringent, preventing anyone from accessing your credit report.

That means that you cannot apply for new credit lines once you implement a credit freeze. And only you can lift the credit freeze, using a password or PIN to unlock your account with any of the credit bureaus. A credit freeze is the ultimate tool for locking down your credit profile and warding off any attempts at identity theft. We alsocollected information on when and how to use a credit freeze.

Fraud alert vs. credit freeze: Which one is right for me?

Fraud alerts and credit freezes can be handy tools for protecting your identity. Fraud protection is sort of like a two-factor authentication process for accessing your credit, whereas a credit freeze blocks anyone from accessing your credit -- until you remove it. This chart provides a brief overview of the differences and similarities: 

Fraud alert vs. credit freeze

First published on Oct. 8, 2021 at 4:00 a.m. PT.