Credit Freeze vs. Fraud Alert

May 20, 2021 2:59:40 PM

When you’re the victim of fraud, there are a number of steps you can take to protect your finances. Depending on the type of scam, you may need to place a security freeze on your credit report, or initiate a fraud alert.

What’s the difference between a credit freeze and a fraud alert? When is the right time to place either one, and how should you go about doing so? Read on for a rundown of everything you need to know about these two important ways to safeguard your credit.

What Is a Credit Freeze?

A credit freeze, also known as a security freeze, blocks access to your credit report. This makes it more difficult for you – or someone fraudulently assuming your identity – to open a new credit account in your name. With a credit freeze in place, your credit report can’t be used to get a new credit card or line of credit on an existing card, or to apply for credit to make a larger purchase such as buying a car.

If you do need to open a credit account while the freeze is active, you can temporarily lift it.

What Is a Fraud Alert?

A fraud alert places a notice on your credit report so that anytime new credit is requested, your identity must be verified. Access isn’t frozen, but an alert ensures that credit can’t be issued in your name without additional steps – deterring identity thieves from taking advantage of credit that isn’t theirs. A fraud alert is active for one year and can be renewed.

Which Is Right for You?

A credit freeze is more comprehensive than a fraud alert, significantly restricting any access to lines of credit in your name. A fraud alert, on the other hand, still allows for credit accounts to be opened in your name – with additional verification required.

If you’re concerned about potential identity theft but unsure if you’ve already been targeted, placing a fraud alert on your credit report might be a good course of action. However, if you know that a fraudster is in possession of your personal information, it’s probably wise to institute a freeze until the matter is resolved.

How Do You Set It Up?

Protecting yourself against fraud via a credit freeze or fraud alert is free, and simple. Moreover, taking this action won’t affect your credit score.

To set up a credit freeze, you can get in touch with each of the three main U.S. credit bureaus: Experian, TransUnion, and Equifax. Explain the situation, and they will help to place a freeze on your credit report. If you want to lift or temporarily pause the credit freeze, contact each bureau to do so. You can also visit each of the bureau’s website and place and remove the freezes online as needed.

To set up a fraud alert, contact any one of the three credit bureaus and share what’s happened. The bureau you get in touch with first will contact the other two. When you place a fraud alert, you’ll also get a free copy of your credit report – be sure to read this thoroughly. If something doesn’t look right, you may need to report identity theft and write to the credit bureau with your dispute.

When Should You End It?

A fraud alert ends after one year, whereas a freeze stays in place until you contact each of the three credit bureaus to lift it. You can consider ending a credit freeze or fraud alert once an active identity theft situation is resolved. On the other hand, if there are any concerns that a scammer may still be afoot – it’s better to be safe than sorry!

If a one-year fraud alert isn’t long enough, another option is to activate an extended fraud alert. To do this, you’ll need to file an official identity theft report with the Federal Trade Commission or be able to show a completed police report. An extended fraud alert is similar to a normal fraud alert in that it’s free and makes it more difficult for someone else to open a credit account in your name. However, an extended alert last for a full seven years – making it a good option when your identity has been stolen and you want to protect yourself from potential repercussions in the future.

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Tags: Credit Cards, Banking Tips, Scam