What is a Fraud Alert?

ElitePersonalFinance
Last Update: January 8, 2021 Credit Report Identity Theft

A fraud alert is a feature offered by each of the three major credit report bureaus — Equifax, Experian, and TransUnion. It is used to mark credit reports to let lenders know that there are potential fraud risks. For consumers, this is very beneficial as it creates an additional security layer for their identity.

That said, fraud alerts have both benefits and downfalls — so, you must understand how they work in their entirety before you request one.

What Does a Fraud Alert Do?

In short, a fraud alert sends a “be careful” signal to the lender. It tells them that your personal information might have been compromised. This influences the creditor to pick up the phone and give you a call, as they do not want to lend to a fraudulent borrower.

Unfortunately, having a fraud alert on your credit file will not guarantee that the lender contacts you before approving a new credit line. This is only a suggestive marking, which mostly benefits identity fraud attempts through major businesses. If an identity thief has a front company, you can still get victimized.

Remember: A fraud alert will improve your identity safety, but do not rely on it alone!

How Long Does a Fraud Alert Last?

Fraud alerts are not permanent.

Depending on your situation, the alert could last anywhere from 90 days to seven years.

Worried about getting victimized: 90 days

Already been victimized: 7 years.

Active duty fraud alert: 1 year

While fraud alerts are not permanent, you have the option to renew them.

Can You Renew a Fraud Alert?

You can renew the 90-day fraud alert after it expires. The extended, 7-year fraud alert is designed for identity theft victims in the midst of restoring their identity. If you are a victim, you can switch to 90-day fraud alerts after your extended alert runs out. If you qualify for an active duty alert, you are free to renew it for the length of your deployment.

How to Place a Fraud Alert?

You only have to request a fraud alert at one of the three credit report companies. Then, that agency will notify the other two to put the same fraud alert on your file with them.

Go to one of the credit report bureau’s websites to place a fraud alert on your credit report today!

FTC
Equifax
Experian
TransUnion

How Does a Fraud Alert Protect You?

For most consumers, the 90-day fraud alert is one of the most effective identity theft prevention tools they have. This is because it gives them a chance to authorize new credit before it’s accessed. If an identity thief steals your information and applies for a credit card or loan, you might be able to stop them before it’s too late.

Further, you get taken off of the pre-approved offers mailing list. This is the list gathered and sold by each of the credit report companies. Your fraud alert will take you off for two years, but you can request.

Limitations

While a fraud alert is generally helpful, it is not the end-all, be-all identity theft prevention. In fact, the 90-day fraud alert only serves as a recommendation to lenders. They are not legally required to contact you for identity verification — it’s only a recommendation.

Make sure to renew your 90-day fraud alert before it expires. If you fail to do so, there will be at least a few days without it where your identity could get defrauded. An identity thief could apply for new credit accounts at any lender that respects these fraud alerts during these unprotected days.

Are Fraud Alerts Free?

You do not have to pay to place a fraud alert on your credit report.

After posting the alert, you will also receive a FREE credit report from that company. This is separate from the free reports offered through AnnualCreditReport.com, so keep that in mind when deciding where you want to make the fraud alert request.

Fraud Alert vs. Credit Monitoring

There was a time when identity theft protection companies were non-existent. The market for identity theft prevention was empty, and only credit monitoring companies could offer real help.

Now, it is no longer necessary to rely on credit monitoring to protect your identity. There are far greater paid services available, and the free alternatives are just as useful. In particular, the free 90-day fraud alerts help so much that it causes credit monitoring services to only benefit those looking to increase their credit scores.

You can get a compilation of identity theft prevention tools by paying for protection, but similar results can come if you build your own protective layers. That said, the initial fraud alert is only one of many ways you should go about trying to prevent identity theft. You can use many other free methods — such as monitoring your Social Security Number on the Social Security Administration website.

Fraud Alert or Credit Freeze?

Do not think of fraud alerts and credit freezes the same.

A fraud alert is a notation on your credit report, which is put there to warn lenders that you might be getting targeted by an identity thief right now. This gives the lender a reason to verify your credentials before processing any applications and/or account changes.

A credit freeze is much more than a goodwill marking; with a freeze on your report, no lender will be able to pull it. You have the power to request verification before a creditor has access to your information, thus eliminating almost all possible angles for an identity thief to take.

Therefore, fraud alerts alone are not enough to make you confident that you will never become an identity theft victim. Credit freezes do much more in that aspect, but they have a few bad elements: your current creditors can still pull your file, and lifting the freeze costs money.

Regardless, you should not see identity theft prevention as a ‘one solution fits all’ scenario.

Conclusion

Fraud alerts were first introduced for those who think their identity is getting stolen to safeguard themselves. It was not intended as a free identity theft prevention method, though many have ultimately used it for this purpose.

The Target data breach affected 40 million Americans, and that story alone is enough reason for all consumers to worry. It does not matter how trusted a company is — even state health department databases get breached — the odds are only in your favor if you make an effort to protect yourself.

Fraud alerts help, but you should further stretch your preventative efforts, as the alert alone will not prevent identity theft.

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