Fraud Alert or Credit Freeze – Which is Right for You?
Considering a fraud alert or credit freeze? With data breaches becoming commonplace, many people are. You don’t need to be an identity theft victim to use them – but it’s helpful to consider your situation. If you’re not sure which is best for you, here are some things to think about.
What do fraud alerts and credit freezes do?
With a fraud alert, businesses must try to verify your identity before extending new credit. Usually that means calling to check if you’re at a particular store attempting to take out new credit. When you place a fraud alert, you may also get a free copy of your credit report from each of the three credit bureaus: Equifax, Experian, and TransUnion. Extended fraud alerts are also available. They are identical to standard fraud alerts, but last much longer and automatically remove you from pre-screened credit offers.
With a credit freeze, often also referred to as security freezes, no one – including you – can access your credit report to open new accounts. Freezing your credit can help prevent identity theives from apply for new credit in your name, but it does not mean your credit history is unavailable to everyone. Companies that you already do business with as well as government agencies executing court orders are able to access your credit file. Credit freezes also do not prevent you from receiving pre-screened credit offers, you need to opt out of those separately.
How long do fraud alerts and credit freezes last?
A fraud alert lasts for one year. You can renew it but you’ll need to remind yourself or it will expire automatically. Identity theft victims are encouraged to an extended fraud alert, which last seven years.
Service members are encouraged to take out active duty fraud alerts. Similar to a fraud alert, an active duty alert lasts one year, however after one year, it can be renewed for the length of your deployment. Active duty alerts also remove you from the credit bureau's pre-screened credit offers for up two years.
In almost all states, a credit freeze lasts until you temporarily or permanently unfreeze or remove it. In a few states, it expires after seven years.
How much do they cost?
Fraud alerts have always been free, and thanks to a 2018 change in the law, credit freezes are now free as well.
How do I place a fraud alert or credit freeze?
To place a fraud alert, contact any one of the three major credit reporting agencies, either by phone or online. The one you contact is required to notify the other two. If you’re an identity theft victim placing an extended fraud alert, you’ll also need to mail or upload your Identity Theft Report which you can create at IdentityTheft.gov.
To place a credit or security freeze, you must contact each of the three credit reporting agencies individually:
- Equifax: Online at https://www.equifax.com/personal/credit-report-services/credit-freeze/ or by phone at 800-685-1111
- Experian: Online at https://www.experian.com/freeze/center.html or by phone at 888-397-3742
- TransUnion: Online at https://www.transunion.com/credit-freeze or by phone at 888-909-8872
How does this all add up?
Both are free, useful tools, and choosing the one that's right for you depends on your situation. Fraud alerts are not as restrictive as credit freezes. They still allow you to apply for new credit by verifying your identity, and may be a better solution if you’re about to take out new credit such as applying for a mortgage, car loan, student loan.
For stronger protection, a credit or security freeze may be the answer. They are a bit more of a hassle - you’ll have to unfreeze and refreeze each time you want new credit, however, if you suspect or know your identity has been compromised and don't need new credit soon, then a credit freeze may be well worth your time and effort.