Total fraud and identity theft cases have tripled over the last decade, with the median dollar amount lost per victim reaching $500, according to identitytheft.org. Luckily, there are a number of ways you can protect your information from those who want to access it without your permission.
Fraud alerts and credit freezes can be a valuable tool for preventing identity theft. Credit freezes prevent anyone from opening a new account in your name (even you), whereas fraud alerts just make doing so more difficult.
Both of these options are free and easy to set up, but each works a little differently. Whether you want to be proactive to prevent identity theft or react to a recent fraud attempt, knowing how each option works is important.
What is a fraud alert?
A fraud alert is a self-imposed warning placed on your credit report 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 one as a preventative measure, fraud alerts can be effective when it comes to protecting your identity and credit.
If you learn that your personal information has been exposed in a breach, a fraud alert can 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 credit accounts 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 must 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
- Phone: 800-685-1111
Experian
- https://www.experian.com/help/
- Phone: 888-EXPERIAN (888-397-3742)
TransUnion
- https://www.transunion.com/credit-help
- 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, since it prevents all parties from accessing your credit report.
That means you cannot apply for new credit accounts once you implement a credit freeze. But you can unfreeze your credit when you’re ready to apply for a new credit account by using a password or PIN to unlock your credit report 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.
To set up a credit freeze, you’ll request it with at least one of the credit bureaus using the contact information listed above. If you want to freeze your credit with all three credit agencies, you’ll need to make three separate requests. The same goes for unfreezing your credit.
When to freeze your credit
Freezing your credit is a fairly severe action because it means you cannot apply for any new credit cards or loans unless you unfreeze your credit first. This can make applying for new credit both inconvenient and time-consuming. But that’s its purpose -- if you can’t open a new credit account easily, neither can someone who might have your identification details.
Only freeze your credit when you want to prevent anyone from opening new credit accounts. If you’re fearful of identity theft or know hackers and thieves have already accessed your sensitive information, you might consider freezing your credit. Parents can also request a security freeze for their children who are under the age of 16 to prevent fraudsters from stealing their identity.
When to unfreeze your credit
Once you freeze your credit, it will stay inaccessible until you take steps to unfreeze it. You can do so by reaching out to the credit bureaus online or by phone.
For the most part, you’ll want to unfreeze your credit any time you plan to apply for a new credit card or loan. Once you’re approved for the new funding or credit card, you can refreeze your credit.
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.
Fraud alert vs. credit freeze
| Fraud alert | Credit freeze | |
| Best if: | You suspect your personal information has been exposed | You have experienced an attempt at identity theft or fraud |
| How long does it last? | 1-7 years | Until you end it |
| Can I still open new credit? | Yes, with verification | No, not until the freeze is discontinued |
| Will it hurt my credit score? | No | No |
| Can I still check my credit score? | Yes | Yes |
Can I have a fraud alert and a credit freeze at the same time?
You can have a fraud alert and a credit freeze at the same time, but you probably won’t need to. After all, a credit freeze prevents anyone from opening new accounts. So adding a fraud alert won’t do you much good.
But if you prefer, you could add a fraud alert onto a credit freeze for an extra layer of protection. Both options are free for consumers, and there’s no harm in using all the tools you have access to to protect your identity.
The bottom line
Fraud alerts and credit freezes can help protect your credit and your credit score, but there’s a good chance one of these options will work better for you than the other. For example, a fraud alert is probably better if you regularly open new credit cards or need to apply for a loan in the near future. It ensures that lenders have to confirm your identity when an application comes through.
A credit freeze makes more sense when you rarely need new credit and don’t plan to apply for any in the future, or suspect some of your sensitive information has been compromised. With a freeze on your account, you won’t be able to get a credit card, a loan or any other type of funding until you unfreeze your credit.
FAQs
Freezing your credit is a bold move that can prevent identity theft completely. Just keep in mind that you’ll have to unfreeze your credit each time you plan to apply for a credit card or a loan.
Freezing your credit is free, whereas a credit lock may require a paid monthly subscription. However, a credit lock can come with additional benefits. For example, Experian CreditLock services cost $24.99 per month but come with credit monitoring for all three credit bureaus, and up to $1 million in identity theft insurance.
Credit locks help prevent identity theft by offering real-time alerts when someone tries to open an account in your name. Credit freezes prevent new accounts completely.
First published on Oct. 8, 2021 at 4:00 a.m. PT.
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