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What To Know About Credit Freezes and Fraud Alerts



According to the FTC, 1.4 million reported identify theft incidents in 2020, an increase from 650,000 in 2019. This seems to be a particularly American problem, as 33 percent of U.S. adults have experienced identity theft, per the online protection agency Identity Force.

Identity theft can be a major headache, as a person with your information can open up a credit card or bank account in your name, and also apply for a loan, and take several other actions that can wreck your credit. There’s plenty of steps you can take to protect yourself from identity theft, but if you suspect your identity has been stolen, or if your information might have been compromised by a data breach, which happens when hackers infiltrate a major system that houses personal information, there’s two free, easy steps you can take right away: requesting a fraud alert and a credit freeze.

To help you better understand what the two procedures do, how they help you and the difference between them, we talked to Scott Hermann, CEO and founder of IdentityIQ identity theft protection.

Fraud Alert Versus Credit Freezes

Credit card freezes and fraud alerts can both protect you if you worry your information has been compromised, but they’re not quite the same thing.

Both are related to your credit report, which is an account of your credit history, gleaned from a number of sources, including banks, credit card companies, collection agencies, and government agencies. It shows your history of paying and managing your debt, and it is one of the main factors that lenders look at when deciding to lend to you. If a thief were to get their hands on your credit report, they could use it to steal your identity, so always shred any report you get after you are finished with it.

If you are worried for any reason, you can place a fraud alert on your credit report, which will prevent a thief from opening a new credit card in your name.

“Anytime you suspect fraud, you should place a fraud alert on your credit report. A fraud alert will make it harder for someone to open a new credit account in your name,” says Hermann. “A fraud alert tells potential lenders to contact you, usually by phone, and verify your identity before extending new credit. If someone tries to get a new credit card or borrow money in your name, you will be contacted, and you can take action to stop the new account.”

In contrast, a credit freeze prevents lenders, or anyone else, from accessing your credit report in the first place, without authorization.

“A credit freeze generally stops access to your credit report, so most lenders can’t see your information until you unfreeze it,” says Hermann. “When you set up a credit freeze, also known as a security freeze, you’ll be assigned or asked to create a PIN code or password you can use when unfreezing your credit file.

“If you, or someone else, apply for a new line of credit in your name, the lender won’t be able to view your credit report, which puts a stop to the application,” he adds. “A freeze is free and available to anyone, whether or not you are a victim of identity theft.”

When To Get A Credit Freeze Or A Fraud Alert

You can’t be too careful when it comes to your information’s safety, so if you suspect you might be vulnerable, don’t hesitate to take action. “Suspicious activity on an individual credit card could indicate that you are a potential fraud victim.”

“As far as suspicious activity on an individual credit card, it’s best to directly contact your credit company right away and report it. Your issuer will ask you to verify the most recent transactions to make sure no other suspicious activity has been recorded,” says Hermann. “Your issuer will close your current credit card and issue another one with a new number within days. If your account has any authorized users on it, the issuer may also send them a new card, too.

As we previously reported, Hari Ravichandran, CEO and founder of Aura, a consumer digital security company, says the following are all signs that your identity has been stolen. Even one of them is a reason to take action.

-There are unrecognizable charges on your credit card.

-Your checks are bouncing, when you believe you should have money in your account.

-You’ve lost access to or been locked out of an account or online service.

-Your credit score has unexpectedly dropped.

-You receive notification that a tax return or unemployment benefits have been filed, even though you have no memory of doing this.

-You stop receiving bills that you typically received in the mail, or you start getting bills that are inaccurate and that you have no recollection of incurring. You may also start receiving unauthorized authentication messages for accounts you don’t recognize.

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How To Place A Credit Freeze And A Fraud Alert

There are three major credit bureaus that keep track of your credit history and issue reports: TransUnion, Equifax, and Experian. You will need to contact all three of them to enact a credit freeze on your reports, and according to Hermann, you will be asked to provide your Social Security number, photo ID, and proof of residence, and you will also need to answer questions that verify your identity.

You will also need to contact a bureau to initiate a fraud alert, but just one will do. “The bureau you contact is required to reach out to the other two,” says Hermann.

How To Stop A Fraud Alert And Credit Freezes

You don’t have to worry about a credit freeze expiring. “A freeze remains in place until you ask the credit bureau to temporarily lift it or remove it altogether,” says Hermann. “If the request is made online or by phone, a credit bureau must lift a freeze within one hour. If the request is made by mail, then the bureau must lift the freeze no later than three business days after getting your request.”

On the other hand, a fraud alert will automatically expire after a year. If you want another one, you will have to contact a bureau again. But if you have been a victim of identity theft, you can request an extended fraud alert that lasts for seven years. But you will need to file a report with either identitytheft.gov or the police.

“The bottom line is that neither option hurts your credit and adds an extra layer of fraud protection. If you are applying for a line of credit, you will need to “thaw”, or unfreeze, your credit,” Hermann says. If you want to end your freeze, or pause it temporarily to apply for a new credit card, you will need to contact your credit bureaus. “If the request is made online or by phone, a credit bureau must lift a freeze within one hour. If the request is made by mail, then the bureau must lift the freeze no later than three business days after getting your request.”

It’s up to you to decide which works best for your situation. With a fraud alert, you have access to your credit, so if you are planning on maybe getting a loan but want to protect yourself, it might be the way to go, while a credit freeze would be best for people who don’t plan on taking out any more credit, and would rather just set the freeze and forget it.

“Both are good ways to help protect your personal information and credit from being used by identity thieves to open new accounts,” says Hermann. “A credit freeze provides the best protection because, unlike a fraud alert, it won’t expire. So, you won’t have to remember to extend it. But you will need to unfreeze your credit if you decide to apply for credit. A fraud alert usually expires after one year.”

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