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A fraud alert and credit freeze are two free tools that can help prevent identity theft and fraud.
A fraud alert requires lenders to contact you before moving forward with a credit application, while a credit freeze locks down your credit reports with the major credit bureaus — Experian, Equifax and TransUnion — so new credit accounts cannot be opened in your name.
There are a few other differences: You can place a fraud alert with one credit bureau, and the others will be notified and follow suit. With credit freezes, however, you have to contact each credit bureau individually. Additionally, fraud alerts expire after a year and need to be renewed, but credit freezes remain until you lift them.
To protect your finances, it's a good idea to freeze your credit. However, if you don't want to bother with freezing and unfreezing your credit every time you submit an application, a fraud alert is also a good choice. Some people use both tools as a double layer of protection.
Here’s a more detailed breakdown of everything you need to know about these two options.
What is a fraud alert?
A fraud alert is a warning placed on your credit record that tells potential lenders to contact you — typically with a phone call — and verify your identity before extending new credit. If someone tries to get a new credit card or borrow money in your name, that contact should tip you off so you can take action to stop the new account.
A fraud alert can be a good option for consumers who want to avoid having to freeze and unfreeze their credit when they want to apply for credit.
There are three main types of credit fraud alerts:
- Fraud alert: This basic type of alert is available to any consumer. It lasts for a year and is renewable. You don't have to have been a victim of fraud or identity theft to request one.
- Extended fraud alert: An extended fraud alert lasts for seven years. It's available only to consumers who have been victims of identity theft and have filed a report with either identitytheft.gov or the police. Credit bureaus will also take your name off marketing lists for credit and insurance offers for five years unless you ask to stay on.
- Active-duty fraud alert: This alert designed for military service members lasts a year and can be renewed for the length of deployment. In addition, the credit bureaus will remove your name from marketing lists for unsolicited credit and insurance offers for two years, unless you ask them not to.
In addition, active-duty service members can get free electronic credit monitoring, which can detect problems that might be the result of identity theft. To sign up, contact each of the three credit bureaus.
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Do I need a fraud alert?
NerdWallet recommends fraud alerts to any consumer who doesn't want a credit freeze or lock. A fraud alert can be especially helpful if your personal information has been exposed in a data breach.
How to place a fraud alert
You can set up a fraud alert with a single phone call or by going online. You have to notify only one of the three credit bureaus — the one you contact is required to reach out to the other two.
Here's the contact information you'll need:
- Equifax: 800-685-1111.
- Experian: 888-397-3742.
- TransUnion: 888-909-8872.
Can I lift a fraud alert?
You can lift a fraud alert the same way you place it, by contacting one of the credit bureaus. Most fraud alerts expire after a year.
NerdWallet recommends extending fraud alerts. Fraud alert removal can increase your risk of identity theft because it makes it easier for someone to apply for credit in your name without your knowledge.
What is a credit freeze?
A credit freeze, sometimes called a security freeze, prevents lenders from accessing your credit report without authorization. Because credit card issuers and lenders usually want to see your credit history before approving a credit card or loan, they're unlikely to issue new credit — to you or someone pretending to be you — if they can't access your credit report. The freeze will stay in place until you lift or “thaw” it with a password-protected credit bureau account or a PIN.
To freeze your credit you’ll have to contact each credit bureau separately.
When you want to open a new account, you can unfreeze your credit and allow lenders to see your credit report. This step might also be necessary if you’re renting an apartment or applying for insurance, both of which usually require a credit check. As long as you have your password or PIN, your credit report can be unfrozen over the phone or online in minutes.
Did you know...
The credit bureaus also offer a similarly named “credit lock” product, sometimes for a fee. It may be simpler to unlock a credit lock than to lift a credit freeze, but the freeze may offer more legal protections. Will a credit freeze or fraud alert hurt my credit score?
Neither a credit freeze nor fraud alert will harm your credit score. With either, you can still check your own credit.
A credit freeze only restricts who can look at your credit reports. It doesn't affect your score or stop you from using credit.
A fraud alert is simply an extra layer of security, and it doesn't affect your credit score either. However, it's easier to apply for credit if you have a fraud alert rather than a credit freeze because an alert doesn't require any lifting or removing first.
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Can I have a fraud alert and a credit freeze?
Yes! There is no harm in adding a fraud alert on top of a credit freeze.
However, no freeze or fraud alert can spot or stop fraudulent charges on an existing credit card account. It's up to you to check carefully for any charges you didn't authorize by reviewing statements or by setting up account alerts to tell you when charges are made.
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