Fraud Alerts vs. Security Freezes
Understanding the Differences
Let’s think of fraudulent acts as injuries to your credit. Some injuries are little, while others require major treatment. One way to protect yourself from harm is to prepare what we’ll call your ’emergency anti-fraud kit.’ This kit basically has two tools in it should you come across acts that are indicative of fraud on your credit report:
- Fraud Alerts (initial and extended)
- Security Freezes
Fraud Alerts and Security Freezes can both help to protect your credit.
Apply Heat: Fraud Alerts and How They Work
Fraud Alerts are like ‘red flags’ for anyone looking at your credit file. They signal to credit grantors that you may have been a victim of suspicious activity. Fraud Alerts alert creditors to take extra steps to verify the legitimacy of a request for new credit, extension of credit on an existing account, or issuance of an additional card on an existing account.
3 Main Types of Alerts and Length of Effectiveness:
- Initial Fraud Alert: 90 days
- Active Duty Alert: 1 year
- Extended Fraud Alert: 7 years
Equifax can place an Initial Fraud Alert on your credit file that is effective for 90 days if you believe that you may have been a victim of fraud or are at risk of being a victim. With an Initial Fraud Alert, when you or someone else attempts to open a credit account in your name, increase the credit limit on an existing account, or obtain a a new card on an existing account, the lender should takes steps to verify that you have authorized the request. When you place an Initial Fraud Alert on your credit report, you’re entitled to order one free credit report from each of the three nationwide consumer reporting companies, and, if you ask, only the last four digits of your Social Security number will appear on your credit reports.
You may be eligible to place Military/Active Duty Alert if you have been called to active duty military service away from your usual duty post. This type of alert is similar to the Initial Fraud Alert, except that it will remain on your file for 12 months, and removes your name from pre-screened offers of credit for 2 years.
If you discover evidence of fraud or know that you are a victim, you may also place an Extended Fraud Alert, which stays on your credit file for 7 years and requires creditors to verify your request by contacting you on the telephone number(s) you provide to the credit reporting agency when you requested the Extended Fraud Alert. To place an Extended Fraud Alert, you will need to write to one of the nationwide credit reporting agencies and provide a valid police report showing that you have been the victim of identity theft (called an “Identity Theft Report”) as well as a day and evening telephone number. The requirements for an Identity Theft Report are listed on the FTC’s website. With an Extended Fraud Alert, you may request two additional free credit file disclosures, and your name is removed from prescreened offers of credit or insurance for 5 years.
For any of these alerts, you will receive a confirmation when the alert is added to your credit file. Equifax will automatically forward any of your Fraud or Active Duty Alerts to the other two credit reporting bureaus, and they will generally be placed on your credit file within 24 hours.
- Do not prevent third parties from viewing your credit file; however third parties are required to take certain steps to verify that you have authorized the activity on your account if they see a fraud alert on the credit file.
- Still provide lenders with access to credit files and the ability to give credit to anyone they wish.
- Are free
Apply Ice: Security Freezes and How They Work
Many (but not all) states allow you to place a Security Freeze on your credit file for free or for a reduced fee. A Security Freeze will put your credit file ‘on ice’ by preventing the information in your Equifax credit file from being reported to third parties, such as credit grantors and other companies. With a Security Freeze, lenders will not be able to gain access to your credit file unless you give permission by “thawing” the frozen file using a secret code, similar to a PIN number. This means that it’s unlikely that an identity thief would be able to open a new account in your name. To see if a Security Freeze is available in your state, what your state requires, how to request it, and what fees may apply, click here.
Keep in mind that even with a Security Freeze, your credit file will still be disclosed in certain situations. For example, companies that you do business with (such as your mortgage, credit card, or cell phone company) will still have access to your credit report, as would collection agencies that are working for one of those companies. Companies will also still be able to offer you prescreened credit. Those are the credit offers you receive in the mail that you have not applied for. Additionally, in some states, potential employers, insurance companies, landlords, and other non-creditors can still get access to your credit report with a Security Freeze in place. You will continue to have access to your free annual credit report. and you will also be able to purchase your credit report and credit score even after placing a Security Freeze.
- Block your credit file from being disclosed to third parties (except as noted above). Should you wish to apply for a loan or service you must be proactive in requesting a lift in the security freeze so that the necessary third parties will be able to view the credit file if the file is frozen (except those exempted by law).
- Remain on your credit file until you decide to remove or lift it.
- Give you more control over who looks at your credit file.
- May require a payment, based on the state in which you reside, to place and/or lift the freeze.
- Are an effective way to prevent an identity thief from opening most new accounts in your name. However, a Security Freeze cannot prevent all types of identity theft. For example, a Security Freeze will not prevent an identity thief from using your existing credit cards or other accounts.
Fraud Alerts are more commonly used than Security Freezes, but may not be as effective in preventing new accounts from being opened in your name should a real identity theft problem arise. Continue to check your credit report regularly by accessing your free annual report at annualcreditreport.com or by purchasing one of the products available from Equifax Personal Solutions. Should you suspect something’s ‘fishy’ you now know two important ways to take action.