Once you’ve been a victim of fraud or identity theft, it’s difficult to know what you should do first.
One of the statements you may have heard when it comes to identity theft is a fraud alert. But do you know what fraud alerts do, what types of fraud alerts are available or how fraud warnings work?
What Is a Fraud Alert?
Credit fraud is nothing you ever want to concern yourself with, but the sad fact is that some people will fall victim to this crime. Whether it’s a stolen credit card or an identity fraud, knowing what steps you can take to solve the problem can make all the difference.
Placing a credit fraud alert on your credit reports will indicate to anyone who reviews the reports that you may be a victim of fraud or identity theft. It alerts creditors and lenders to do more thorough checks on your identity before they make a loan on your behalf. They may call to check if you’re actually in a particular store and try to get a new loan – for example.
A fraud alert is the easiest and fastest way to protect your credit file. Think of it as a “red flag” for potential lenders and creditors. Credit experts agree that having a fraud alert in place is a good idea for any consumer.
As an additional precaution, a credit freeze is also advised. It offers the best protection against your personal information being used to set up a credit account in your name. However, if you don’t want a freeze or suspension, a fraud alert can provide a reasonable level of protection.
Fraud alerts are free, usually last for a limited time and are easily renewable. There are different types of fraud alerts and we will look at how you can include an alert on your credit reports, when and if you should add one and how you can remove it.
When to Place a Fraud Alert?
At the first sign of identity theft or fraud on their account, consumers should place a fraud alert on their credit. Even if your credit reports include a fraud alert, there is no guarantee that this alert will completely stop the identity theft.
Remember that while a fraud alert is an important line of defense and a red flag for lenders, it does not completely prevent unauthorized accounts from being opened. A credit freeze option would make this possible for you.
Will a Fraud Alert Affect Your Credit Score?
A fraud alert has no effect on the creditworthiness of a consumer. However, the warning may sometimes delay certain credit applications until your identity can be verified.
Can Someone Else Manage Credit Alerts For Me?
A power of attorney or court-appointed document can be used to appoint a “personal representative” to process a fraud alert on your behalf. The personal representative can add or delete fraud alerts or update contact information.
Fraud Alert Types
Make sure you ask for the right type of fraud alert. A 90-day or seven-year fraud alert informs lenders that a consumer may be a victim of fraud, but it’s not the same as a credit freeze. You can still open a new account with a fraud alert after the lender has done its due diligence and contacted you.
A credit freeze prevents lenders from checking your credit to open a new account. Since most lenders won’t open an account without checking at least one credit report, a credit freeze can effectively prevent the opening of a new account.
Initial Fraud Alert
You can place an initial fraud alert on your credit report if you believe that you are (or will be) a victim of fraud or identity theft. Credit reporting agencies will keep this alert on your file for a few months or up to a year in total.
During this time, it may be more difficult for an identity thief to open accounts in your name, as the warning requires a company to verify your identity before a new credit line is approved.
After that, the initial fraud warning expires and is removed, but you have the option to place another initial fraud warning when the first one expires. Free of charge.
If you include an initial fraud alert in your file, you have the right to order a free copy of your credit report from any of the nationally operating credit reporting companies. These free reports do not count as your free annual report from each credit reporting company.
Extended Alert
You can add an extended alert to your credit report after your identity is stolen and you file an identity theft report.
This advanced fraud alert requires more information. Meaning you must file an identity theft report in the form of a police report and your personal identity theft statement to receive this type of fraud alert. Or you can file an identity theft report with the Federal Trade Commission by filling out an online form.
If you include an extended fraud alert in your file, you have the right to order two free copies of your credit report each year from any nationwide credit reporting agency.
An extended fraud alert is valid for seven years. This alert requires the lender to contact you in person or via the phone number you provide or any other contact method you specify to verify that you are the person applying for credit.
Security Freeze
A credit freeze, prevents new creditors from accessing your credit file and opening accounts in your name until you lift the freeze. In the US, you can freeze and unfreeze your credit data with the three nationwide credit reporting companies, regardless of which state you live in.
Federal law requiring a freeze does not apply to individuals who request your credit report for employment, tenant verification or insurance purposes.
Be aware that unlike fraud alerts, credit freezes must be reported individually to each agency. If you impose a security block on one credit bureau, other credit bureaus are not automatically notified. You must contact each credit bureau individually if you want to impose a security block on all three nationwide credit bureau companies.
Since most companies will not open credit accounts without verifying your credit report, a security block will prevent identity thieves from opening new accounts in your name. Remember that a lock does not prevent identity thieves from taking over existing accounts.
Active Duty Alert
Members of the military have an additional option – active duty alerts. If you are a member of the service and about to go on a mission, you can put an active service alert on your credit report, which is valid for one year and can be extended for the duration of your mission. This can be very helpful in protecting your identity during the assignment, as a company may need to take additional steps before issuing credit on your behalf.
When you add an alert your credit report while on active duty, creditors must take reasonable steps to ensure that the person making the request is actually you before opening an account, issuing an additional credit card for an existing account, or increasing the credit limit on your existing account. In addition, your name will be removed from the credit reporting companies’ nationwide marketing lists for credit offers and insurance for two years.
How to Place a Fraud Alert
Place a Credit Fraud Alert in the US
All you need to do to place a fraud alert is to contact one of the three major credit reporting agencies in United States and they will notify the other two. You can call, go online or write to any of the three major credit bureaus: Experian, TransUnion and Equifax. Make sure the credit bureau has the right contact information for you.
Each credit bureau should contact you to confirm the notification and give you instructions on how to obtain a free copy of your credit report in addition to the one you can receive every 12 months. Keep the letter or email confirming the notification in case a lender does not comply and someone opens a fraudulent account.
Place a Credit Fraud Alert in Canada
To put a fraud alert on your credit report in Canada, you may contact the two credit reporting agencies, TransUnion and Equifax. Let them know to add a fraud alert to your file. Ask them for copies of your credit report as well, check it and report any false information.
Place a Credit Fraud Alert in United Kingdom
There are three credit reference agencies, Equifax, Experian and TransUnion in United Kingdom. They all hold your information on file and this is also where you can apply for a credit fraud alert in the UK.
How to Remove the Fraud Alert
Once you have placed one of these fraud alerts in your credit file, you can simply let them expire or you can remove it beforehand. If you choose to remove a fraud alert before its expiration date, you must apply to the appropriate credit bureau.
The real key when it comes to stopping the exposure of your personal information or stealing your identity is to act quickly. If you can react before the identity thieves do, it will help you stay one step ahead of “the villains”.
Staying Attentive
Fraud alerts, freezing and blocking of credit – products offered by credit bureaus – are all aimed at preventing new accounts from being opened fraudulently. They do not prevent an account that you have already opened from being fraudulently debited.
Therefore you need to keep looking for fraud on your existing accounts:
- Check credit card statements for charges that you do not recognize. Often a phone number is listed with the merchant’s name on transactions so you can investigate anything that comes to your attention.
- Sign up for text or email notifications about credit transactions. Many issuers let you set a transaction amount, so you’ll be notified of anything beyond that.
- Sign up for a monitoring service that lets you track changes in your credit reports and ratings, as well as credit card activity, so you can quickly identify and track anything that looks bad.
If you see a charge that you believe is not yours, call your issuer immediately to dispute it. Your card issuer cannot charge interest or fees on the transaction while it is being investigated.