How Fraud Alerts Protect You | Credit 101 Ep. 197

A fraud alert is a preventative measure that helps protect you from identity theft and fraud by alerting creditors to take extra steps when verifying your identity. Here’s how fraud alerts work and how they can safeguard your financial security:

1. What is a Fraud Alert?

• Definition: A fraud alert is a notice placed on your credit report that informs creditors to verify your identity before opening new accounts or extending credit.
• Purpose: Designed to make it harder for identity thieves to open accounts in your name by requiring additional verification.

2. Types of Fraud Alerts

• Initial Fraud Alert:
  • Duration: Lasts for 90 days.
  • Eligibility: Available to anyone who suspects they may be a victim of fraud or identity theft.
  • Process: Requires creditors to take steps to verify your identity before extending credit.
• Extended Fraud Alert:
  • Duration: Lasts for 7 years.
  • Eligibility: Available to individuals who have been confirmed victims of identity theft or fraud.
  • Process: Requires creditors to contact you directly to verify your identity before opening new accounts.
• Active Duty Military Alert:
  • Duration: Lasts for 12 months.
  • Eligibility: Available to military personnel who are on active duty.
  • Process: Similar to the initial alert, but specifically designed for those in military service to prevent fraud while deployed.

3. How to Place a Fraud Alert

• Contact One Credit Bureau: You only need to contact one of the three major credit bureaus—Equifax, Experian, or TransUnion—to place a fraud alert. They will notify the other two bureaus.
• Provide Information: You will need to provide personal information and may be required to verify your identity.
• Receive Confirmation: Once placed, you will receive a confirmation notice, and the alert will be added to your credit report.

4. Impact of a Fraud Alert

• Creditor Verification: Creditors will be required to take additional steps to verify your identity before issuing new credit.
• Does Not Block Access: Unlike a security freeze, a fraud alert does not block access to your credit report. It simply adds a layer of verification.
• May Impact Your Credit Applications: You may need to provide additional documentation or answer security questions when applying for credit.

5. How to Remove or Update a Fraud Alert

• Remove: To remove a fraud alert, contact the credit bureau where the alert was placed and request its removal. This may be necessary if you no longer need the alert or if you have resolved the identity theft issues.
• Update: If your situation changes, such as needing to extend an alert or switch from an initial to an extended alert, contact the credit bureau to update your alert type.

6. Fraud Alert vs. Security Freeze

• Fraud Alert: Requires creditors to take additional steps to verify your identity but does not block access to your credit report.
• Security Freeze: Restricts access to your credit report entirely until you lift the freeze. Provides a higher level of protection than a fraud alert but may be more cumbersome to manage.

7. When to Use a Fraud Alert

• Suspected Fraud: Place a fraud alert if you suspect you might be a victim of identity theft or have noticed suspicious activity on your credit report.
• Identity Theft Victim: If you are a confirmed victim of identity theft, consider placing an extended fraud alert for long-term protection.
• Military Deployment: If you are an active-duty military member, an active duty military alert can help protect your credit while you are deployed.

Conclusion

Fraud alerts are a valuable tool for protecting your credit and personal information from identity theft. By understanding the different types of fraud alerts, how to place them, and their impact on your credit, you can take proactive steps to safeguard your financial security and prevent unauthorized access to your credit report.