What To Know About Credit Freezes and Fraud Alerts (2024)

FAQs

What To Know About Credit Freezes and Fraud Alerts? ›

A fraud alert simply requires that creditors verify identity before opening new credit. A credit freeze cuts off access to your credit reports unless you lift the freeze, which makes it unlikely new credit accounts can be opened in your name without your consent. Fraud alerts and credit freezes are free.

Placing a fraud alert does not affect your credit scores. It alerts creditors that you may have been a victim of fraud and encourages them to take extra steps, such as contacting you at a phone number you provide, to verify your identity before extending credit in your name.

While a security freeze can help protect you by preventing certain access to your credit reports if someone attempts to open a new credit account in your name, it can't help protect you against other forms of fraud, such as a stolen credit card number.

When you have a security freeze on your credit file, certain entities still have access to it. Your report can still be released to your existing creditors or to collection agencies acting on their behalf. They can use it to review or collect on your account.

Fraud alerts encourage lenders and creditors to take extra steps to verify your identity, such as contacting you by phone, before opening a new credit account in your name or making changes to existing accounts. This can make it harder for someone to open unauthorized accounts in your name.

It's simpler to put a credit fraud alert in place — you can do it with a single phone call — but a credit freeze offers better protection. Also, fraud alerts expire automatically, while credit freezes last until you lift them.

Then, if you're worried about identity theft, you've been a victim of fraud or you're deployed in the military, you should set up the appropriate fraud alert, too. "It is not redundant, because when you remove the credit freeze, the fraud alert would still be on there," Kohlweiler says.

A freeze can give you a false sense of security — you may still be susceptible to credit fraud or other fraud involving your Social Security number. A credit freeze won't affect your current accounts, but if a thief steals the information on an existing account, your credit may be used without your permission.

Advantages of locking your SSN

No one can use your Social Security number when it's locked. No one can apply for a job in your name and run up a tax bill for money you never earned. No one can use your Social Security number to apply for credit or open new accounts in your name.

So technically, you'll need to lock or freeze your credit reports at all three bureaus to have the best chance at preventing criminals from opening new accounts. Here's how to lock your report with each of the major bureaus: Equifax offers Lock & Alert™ for free.

What's the difference between a freeze and an alert? ›

If you want more control over who can access your personal information, you may want to freeze your credit. But if you don't want to block access to your credit report, though still want to add an extra security measure, a fraud alert may be right for you.

Placing a credit freeze is free for you and your children, as is lifting it when applying for new credit. A credit freeze lasts as long as you want it to.

While credit lock vs. freeze might sound different, they function similarly: A credit freeze is a free service that stops new accounts from being opened, while a credit lock is a service from the credit bureaus that lets you lock and unlock your credit faster than a freeze.

A fraud alert is a self-imposed warning placed on your credit report that requires any lenders or financial institutions to contact you before opening any new lines of credit in your name. While they don't prevent new accounts from being opened in your name, they do provide an extra security step.

Consequences Ahead

If you just ignore the messages, Ulzheimer says, "the issuer will likely disallow recent charges and suspend your credit line." One factor to consider: whether the charge is in fact fraudulent.

An initial fraud alert is free and lasts for one year. Use this when: You've been a victim of ID theft, and you've completed an FTC Identity Theft Report or police report. An extended fraud alert is free, lasts for seven years, and removes you from credit card and insurance offers for five years.

Fraud alerts have no impact on the contents of your credit reports, or on the credit scores based on that information, but they can delay the credit application process.

When you place a fraud alert on your credit report, you can get a free copy of your credit report from each of the three credit bureaus. Duration: A fraud alert lasts one year. After a year, you can renew it.

Yes, placing a freeze on your credit reports is one of the best ways to help protect you from fraudulent credit applications. It's free and you can complete it fairly quickly online or by phone. Unfreezing, also known as thawing, your credit is typically quick when you need to apply for credit.