Are Fraud Alerts a Good Idea?
You already keep a close eye on your credit cards and existing bank accounts. But how can you protect yourself against someone else opening lines of credit in your name?
In 2021, the Federal Trade Commission (FTC) received more than 32,000 complaints of fraud related to existing cards.[*] But they received more than 10 times as many complaints — over 360,000 — regarding identity thieves opening new credit card accounts.
This kind of loan fraud is rampant, but you can protect yourself by adding a fraud alert to your credit report or requesting a complete credit freeze. But what’s the difference between these two tools? And which is best for you?
In this post:
- What is a fraud alert?
- Types of fraud alerts
- What is a credit freeze?
- Fraud alerts vs. credit freezes
- How to choose between the two
- Can you enable both?
What Is a Fraud Alert? A Closer Look
A fraud alert flags your credit report and recommends that lenders verify your identity before issuing new lines of credit.
- If you have a fraud alert in place and 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 you 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.
Will they hurt your credit score?
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. You only need to contact one of the three credit bureaus (Equifax, Experian, and TransUnion) to file an alert — the bureau you contact is required by law to inform the other two.
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.
Types of Fraud Alerts: Initial, Extended, and Active Duty
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.
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 as well. 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) 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.
In other words, you can request a total of six credit reports (two from each bureau) during each 12-month period for which you have an extended fraud alert.
3. Active duty alert
This third type of alert is for service members on active duty. The active military fraud alert lasts for one year and can be renewed each year for the length of your deployment.
You don’t need to have been the victim of identity theft nor present an official report, but you will need 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.
How do you choose the right fraud alert?
- If you’re serving in the military, choose an active duty alert.
- If you’ve been the victim of identity theft, choose an extended fraud alert.
- If neither of those applies, but you still want to protect your identity, an initial fraud alert is best.
To Set up a Fraud Alert, Do This:
Setting up a fraud alert is simple and should take less than 30 minutes. You’ll contact one of the three credit bureaus (Equifax, Experian, or TransUnion), request a fraud alert, and provide the necessary documentation.
The fastest way to request a fraud alert is online, but you can also set it up via phone or by mailing a physical form with copies of your documents.
Each bureau has slightly different requirements, but generally you’ll need two or three of the following documents:
- Government-issued ID, like a driver’s license
- Birth certificate
- Social Security card
- 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 alert: Official identity theft report (FTC report, police report)
- For an active duty alert: Military ID
You can contact any one of the credit bureaus by using the contact information below:
- Equifax: 800-685-1111
- Experian: 888-EXPERIAN (888-397-3742)
- TransUnion: 888-909-8872
To Renew or Cancel a Fraud Alert, Do This:
All fraud alerts expire automatically — after one year for initial or active duty alerts, and after seven years for extended alerts. But once your identity has been stolen, your personal information can circulate indefinitely on the Dark Web.
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.
The renewal process is easy, but know that you’ll need to submit eligibility documents again to renew extended and active military alerts.
If you need to remove a fraud alert before it expires, you’ll follow the same process as creating an alert — online, on the phone, or by mail — but ask to cancel the alert instead of adding a new one. Unlike creating a fraud alert, you’ll need to cancel at each bureau separately. And you may need to show proof of identity to cancel.
But fraud alerts are only one way to protect your credit. Credit freezes, while similar in some ways to fraud alerts, provide added protection against fraud and identity theft.
What Is a Credit Freeze?
A credit freeze, also called a security freeze, blocks your credit report so that lenders can’t even access your credit report. It offers even stronger protection for your credit report, but also blocks credit applications that you authorize.
Anyone can set up a freeze, and it doesn’t require an official identity theft report. Like a fraud alert, it’s free and doesn’t affect your credit history or credit score, and you can still review your report if it’s frozen.
A major difference from fraud alerts is that you’ll need to file a credit freeze separately at each bureau, requiring several extra steps.
Another difference is that while there are three kinds of fraud alerts, there’s only one type of credit freeze. And a freeze lasts indefinitely — until you cancel it.
Credit freeze vs. credit lock:
It’s easy to confuse a 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.
Setting up a Credit Freeze:
To set up a credit freeze, you’ll need to contact Equifax, Experian, and TransUnion separately using the contact information above. You’ll need to provide proof of identity with similar documentation required for a fraud alert, such as an official ID, proof of your Social Security number, and proof of your current address.
For minors or adults who need assistance:
You can also set up a freeze for a minor (up to age 16) or an incapacitated adult in your charge. In addition to proving your identity, you’ll need to prove theirs as well — along with proof of your legal guardianship.
Typically you’ll need the child’s birth certificate, Social Security card, and proof of the power of attorney if you’re not listed on the child’s birth certificate. Minors who are 16 or 17 years old must set up credit freezes themselves.
Lifting a Credit Freeze:
There are two ways to remove a credit freeze: through a temporary “thaw,” or a permanent unfreeze. For example, if you apply for a new credit card, you can contact the bureaus and ask for a temporary credit thaw of just a few days.
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).
If you’ll be requesting credit checks often or don’t want to have your credit frozen anymore, you can request that each bureau lift the freeze. You can do this quickly on each bureau’s online portal.
Now that you understand the difference between fraud alerts and credit freezes, which should you choose?
Which Is Better: A Credit Freeze or a Fraud Alert?
The experts agree — a credit freeze offers better protection than a fraud alert against identity thieves.
“I am 100 percent fully behind the strategy of freezing your credit reports,” writes credit expert John Ulzheimer.[*] “Even if you’ve never been a victim or don’t think you ever will be, I just think it’s smart to have some control over who is accessing your credit report.”
Eva Velasquez, President and CEO of the Identity Theft Resource Center, writes “A credit freeze is generally considered the most effective tool to prevent new accounts from being opened in your name.”[*]
But a credit freeze comes with some serious downsides. To set it up, you need to contact all three credit reporting agencies instead of just one. And you will need to call all three agencies again to thaw your credit file before every inquiry.
Here are the advantages and disadvantages of both.
- Less hassle: You can apply for credit worry-free. Just answer a phone call to confirm your identity, and you’re all set.
- Faster to set up: You only need to contact one credit bureau; that bureau is required to inform the other two.
- Extra credit report: An extended fraud alert gives you an extra free credit report each year, for a total of six annually.
- Less junk mail: Extended and active duty alerts remove you from pre-approved mailing lists automatically.
- Less secure: An alert makes it harder for someone to apply for credit under your name, but not impossible. Credit issuers aren’t required by law to verify. And a motivated thief can hijack your phone’s SIM — and then answer calls posing as you.
- Slower credit approval: You’ll need to confirm your identity before each credit check.
- Expiration date: You’ll need to renew a fraud alert every year, or every seven years for extended alerts.
- Most secure: A credit freeze completely seals your credit history, making it one of the most secure protections against fraud.
- No renewals: A freeze lasts indefinitely. You won’t need to renew it.
- Available to anyone: Extended and active duty fraud alerts require proof of identity theft or military duty, respectively. But anyone can set up a credit freeze.
- Blocks all credit: A freeze rejects even valid credit checks, like for a car loan or new job. You’ll need to temporarily lift the freeze each time.
- Need to contact all bureaus: You’ll need to add and remove freezes with each credit bureau separately.
- No expiration date: If you no longer want a fraud alert, it will disappear on its own. If you don’t want a credit freeze anymore, you must call all three bureaus.
To help decide, we’ve broken down which might be best for you.
When to Choose a Fraud Alert
1. You may actively apply for credit soon
A fraud alert requires you to verify your identity for a credit check, but it won’t block the check entirely. 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.
2. You’re planning on changing jobs, houses, or banks
Credit checks are not just run for credit cards and loans. 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.
3. 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.
4. 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
1. You’ve confirmed you’re a victim of fraud
If you’ve already been a victim of identity theft, you should take extra precautions. A credit freeze is a good next step to block future attempts, but one that few people take. A recent survey showed only 3% of people freeze their credit after learning they’ve been victims of a data breach.[*]
2. You’re close to retirement
As you near retirement, you won’t need to worry about employment credit checks, which makes a credit freeze a more attractive option. This is especially true if you aren’t planning on applying for a new mortgage, insurance policy, or car loan in the near future.
3. Your children have credit files
Freezing their credit reports can help protect your children who are under 16. 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.
4. You want the best security
The absolute best way to protect your credit report from identity thieves is to set up a credit freeze. Having a fraud alert in place is like asking visitors to ring the doorbell before they come in; activating a credit freeze is like barring the door shut.
As we wrap up, you might be wondering if there’s a simple answer to this whole debate. Can’t you just do both?
Can You Enable a Credit Freeze and a Fraud Alert?
While it may be technically possible to set up a fraud alert on your credit report and then activate a freeze, it’s redundant.
Anyone who could impersonate you well enough to lift a credit freeze probably wouldn’t have problems passing the security check for a fraud alert. If you’re considering both, it makes more sense to just use a credit freeze.
While we’d all like extra security, it’s important to note that neither a fraud alert nor a credit freeze can eliminate the possibility of identity theft. But there are other protections that can help.
Protecting Your Credit Is Easier With Help
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.