CREDITBUDGETINGLIFESTYLE & TRAVEL

Credit Freeze vs. Fraud Alert: What to Know

Everyone has a need to know that their identity is safe and no one wants to hear that their personal information has been compromised. Our personal information is heavily connected to our credit reports. All three of the major credit bureaus, Experian, Equifax, and TransUnion, use information such as your Social Security number, birthdate, address, and more. Unfortunately, your credit report cannot be stored in a lock box the way you can secure your passport or physical SSN card. This being said there are a few things to consider to add an extra layer of protection when it comes to your credit reports.

Fraud alerts and credit freezes are two ways to safeguard your identity from being used to open new loans or credit cards in your name. All of the credit bureaus offer these protections and may be added to your credit report in different situations.

Fraud Alerts

Fraud alerts are often used if you have been a victim of identity theft or you know that your personal information has been compromised. When this alert is placed on your credit report lenders will be aware that you have been at higher risk of having your identity stolen and will go through extra measures to confirm your identity. There are three types of fraud alerts; fraud alert, extended fraud alert, and active-duty fraud alert. Anyone can add a fraud alert on their credit report and this will automatically expire after one year. This can easily be added to each for your credit bureaus on their websites. An extended fraud alert should be place if you have been a victim of identity theft. This will stay on your credit report for seven years and you will need to provide the credit bureaus will additional information such as the identity theft report that was filed with identitytheft.gov or the police report. Active-duty fraud alert is meant for individuals in the military who are deployed abroad. This alert can be extended to the time range of the deployment. Military members can opt out of their information being sent for promotional credit offers and they will receive credit monitoring alerts.

Credit Freezes

Adding a freeze on your credit is quite different from a fraud alert. Freezing your credit will prevent your credit report from being accessed. This means if you want to apply for a loan or a credit card you will need to unfreeze your credit before beginning the application process. To unfreeze your credit with each bureau you will need your password to log into your credit bureau account along with a PIN you created when you set up the freeze. Credit freezes are great for minors and older adults who are at higher risk for identity theft. It is also great for anyone who is not actively applying for new credit.

Credit Score Impact

The good news is that fraud alerts and credit freezes have no impact on your credit score. They are meant to add that extra layer of protection from your credit report from being viewed and do not prevent your current lenders from reporting your loan information. Keep in mind credit freezes and fraud alerts are meant to protect your identity, but are not going to protect you from fraudulent purchases on your existing credit or debit cards. Review your transaction history frequently and check with your financial institutions to see if they have extra fraud protection available for your account and cards.