Is a Fraud Alert or Credit Freeze Better?
Criminals, con artists, and identity thieves are almost always financially motivated. And one of the most damaging things they can do is access your credit file and open new accounts or take out loans in your name.
Unfortunately, this type of financial fraud happens more than you’d expect.
Last year, the Federal Trade Commission (FTC) received 10x as many complaints about fraudulent new accounts than fraud on existing accounts [*].
Both a fraud alert and credit freeze can help protect you from new account and loan fraud.
But which one is right for you and your unique situation?
In this guide, we’ll explain the differences between a fraud alert and credit freeze, how to use both of them, and give you a quick guide on picking which option is best for protecting your financial health.
Fraud Alert vs. Credit Freeze: What You Need To Know
Many people use the terms fraud alert, security freeze, credit freeze, and credit lock interchangeably. But while all of these tools are valid methods for protecting your credit against scammers, there are some pretty big differences between them that you should be aware of.
Here are the main differences between a fraud alert and a credit freeze:
Note: Neither a fraud alert or a credit freeze can stop scammers from using or taking over your current accounts. If scammers have access to your credit card numbers, bank account, or other sensitive financial information, you should consider a credit monitoring service.
Now, let’s go deeper into both options to help you decide which one you should use to protect your identity and finances.
What Is a Fraud Alert? How Does It Work?
A fraud alert flags your credit report and recommends that lenders verify your identity before issuing new lines of credit. In most cases, this means you’ll receive a phone call confirming any new accounts or loans.
Here’s what happens if you have a fraud alert in place:
- If an inquiry is made into your credit history: you’ll get a call from a lender confirming your identity. Only after you agree will the lender process an application for a new credit account.
- If someone tries to take out loans or open new accounts: You should get a call to authorize new accounts that you didn’t request. You can deny the request and protect yourself from the attempted identity theft.
Fraud alerts are free and have no impact on your credit report or credit scores. You can still request your free annual credit report if you have a fraud alert set up.
Types of Fraud Alerts: Initial, Extended, and Active Duty
There are three different types of fraud alerts you can request, depending on your situation:
1. Initial fraud alert
Anyone who suspects fraud can set up an initial fraud alert. It lasts for one year, and you can renew it every year thereafter. For an initial fraud alert, you’ll need to present documents to prove your identity and current mailing address.
An initial fraud alert requests lenders confirm your identity, but it doesn’t offer any other benefits.
Who it’s for: People who suspect their identity has been stolen.
How long does it last? 1 year (can be renewed).
2. Extended fraud alert
If you’ve been a victim of identity theft, you can set up an extended fraud alert. It lasts for seven years and can be renewed indefinitely. In addition to documents proving your identity and mailing address, you’ll need to present an official identity theft report.
Bureaus will accept either a report filed with the Federal Trade Commission (FTC) at IdentityTheft.gov or a police report. We recommend filing both.
In addition to confirming your identity for new credit, an extended alert removes you from pre-screened credit card and insurance offers for the first five years of the alert. You also get access to an extra free credit report from each major credit bureau each year, as well as the one you’re entitled to by law.
Who it’s for: Anyone who has been the victim of identity theft.
How long does it last? 7 years (can be renewed).
3. Active duty alert
Service members on active duty can request a fraud alert that lasts for one year and can be renewed each year for the length of their deployment. To request an active duty alert, you don’t need to be a victim of identity theft. However, you will have to provide your military ID alongside other identity documents.
In addition to confirming your identity for each new credit request, an active duty alert also removes you from pre-screened offers for two years.
Who it’s for: Active duty service members on deployment.
How long does it last? 1 year (can be renewed).
How To Set Up a Fraud Alert
Setting up a fraud alert is simple and should take less than 30 minutes.
First, contact one of the three credit bureaus (Equifax, Experian, or TransUnion) and request a fraud alert. You’ll need to supply documentation to prove your identity and situation, such as:
- Government-issued ID (Driver’s license, birth certificate, Social Security card, etc.)
- Utility bill, phone bill, or bank statement showing your name and address
- Pay stub, W2, or 1099 with your Social Security number (SSN)
- For an extended fraud alert: FTC Identity Theft report and/or police report
- For an active duty alert: Military ID
Here’s how to contact the credit bureaus:
- Equifax: 800-685-1111
- Experian: 888-EXPERIAN (888-397-3742)
- TransUnion: 888-909-8872
💡 Related: Can Someone Steal Your Identity With Your ID? →
How To Renew or Cancel a Fraud Alert
There’s no harm in leaving a fraud alert in place for its full duration. However, you can still cancel or renew an alert before it automatically expires:
- How to renew a fraud alert: Contact one of the credit bureaus and request that they renew your fraud alert. You’ll be required to submit eligibility documents again for extended and active duty alerts.
- How to cancel a fraud alert: Contact each credit bureau individually and request that they lift the fraud alert. If you created a fraud alert because your data was compromised, you’ll likely still be at risk after the alert expires. That’s why it’s a good idea to renew an alert once you’ve set it up.
What Is a Credit Freeze?
A credit freeze — also called a security freeze — prevents lenders from accessing your credit report. In essence, this will stop scammers from being able to open new accounts in your name as lenders won’t be able to check your credit file.
A credit freeze offers stronger protection for your credit report, but also blocks credit applications that you authorize. It also won’t affect your credit history or credit score, and you can still review your report if it’s frozen.
Credit freeze vs. credit lock:
A credit lock is simliar to a credit freeze, credit freeze with a credit lock. The difference is that credit freezes are mandated by federal law and required to be free, while credit locks are programs created by reporting bureaus. Credit locks also freeze your credit, but you are charged a monthly fee for faster service.
Did you know? You can actively monitor your credit file for signs of fraud or see if someone is trying to take out loans in your name. For a free copy of your credit report, visit: AnnualCreditReport.com.
How To Set up a Credit Freeze
To set up a credit freeze, you’ll need to contact Equifax, Experian, and TransUnion separately and provide proof of identity, such as an official ID, proof of your Social Security number, and proof of your current address.
Anyone can set up a freeze, and it doesn’t require an official identity theft report.
How to freeze a minor’s credit (or if you need assistance):
Adults or guardians can set up a credit freeze for a minor (up to age 16) or incapacitated adult in their charge. Typically, you’ll need to provide the child’s birth certificate, Social Security card, and proof of your legal guardianship. Minors who are 16 or 17 years old must set up credit freezes themselves.
How To “Unfreeze” Your Credit File
There are two options if you want to remove a credit freeze:
- A temporary “thaw” of a few days: For example, if you want to apply for a new credit card.
- A permanent “unfreeze”: For example, if you don’t want to go through the hassle of freezing and unfreezing your credit.
Both options require you to contact each of the credit reporting agencies seperately. By law, the bureaus are required to lift the freeze within one hour of your request (and within three business days if you request the lift by mail).
Can you enable a credit freeze and a fraud alert?
It’s technically possible to set up a fraud alert and then freeze your credit, however it’s redundant and doesn’t add any additional security.
Instead, a better option would be to sign up for an identity theft protection service that offers three-bureau credit monitoring. This way, you’ll get alerted in near real-time of any suspicious activity on your credit file, bank account, personal information, and more.
Which Is Better: A Credit Freeze or a Fraud Alert?
So, which is right for you? A credit freeze or a fraud alert? Here’s when to choose each one:
When to choose a fraud alert
- You may actively apply for credit soon. If you’re planning on getting a car loan, mortgage, or new credit card in the next few months, a fraud alert may be the best choice.
- You’re planning on changing jobs, houses, or banks. Employers, landlords, insurance companies, banks, and other service providers can also review your history. If you’re going to get a new job or apply for insurance, a fraud alert might be better than a credit freeze.
- You’re looking for a balance of protection and convenience. For the average consumer, a fraud alert offers peace of mind with less hassle. If you just want “set it and forget it” fraud protection, this may be the best option.
- You’re on active duty in the military. Identity thieves often target people known to be out of the country. Anyone on deployment should set up an active military fraud alert.
When to choose a credit freeze:
- You’ve confirmed you’re a victim of fraud. If you’ve already been a victim of identity theft, a credit freeze can help block future attempts to defraud you.
- You’re close to retirement. If you have few reasons to request new credit, a credit freeze is a great tool to protect your credit score.
- You want to protect your children. Although the results can be unsettling, it’s always a good test to request a credit report for your child. If one exists, it’s most likely because your child has been a victim of child identity theft. You should immediately freeze any credit reports in your children’s names that you find.
- You want the best security. The absolute best way to protect your credit report from identity thieves is to set up a credit freeze.
The Bottom Line: Stop Scammers at the Source
A fraud alert ensures that lenders confirm your identity before doing a credit check, while a credit freeze seals your credit report entirely. Both can be effective tools to help prevent identity theft.
But your credit report is just one of many targets for identity thieves. Credit alerts and freezes can’t stop someone from stealing your identity. Comprehensive identity theft protection providers, such as Aura, offer credit monitoring, alert you about signs of fraud, and limit damages to your personal finances.