Identity theft is a growing issue, with 33% of U.S. citizens having experienced this phenomenon. Fraudulent actors can use your personal information to obtain loans and lines of credit. Their financial activity can hurt your score and put you in debt, but a fraud alert can prevent this scenario. We’ll cover how a fraud alert can keep you safe and whether it will have any impact on your credit score.
What is a fraud alert?
A fraud alert is a notification on your credit report that informs creditors about your status as a victim of fraud. This alert will make lenders more cautious about lending money when they receive an application with your personal details. The lender will wait for an applicant to verify their identity before proceeding with the application.
How do I know if I need a fraud alert?
Your credit report is the best place to look if you think you need a fraud alert. Your credit report shows your credit activity, including your loans and lines of credit. If you see any suspicious items on your credit report, it may be a good idea to place a fraud alert on your account.
How to place a fraud alert
You have to contact one of the major credit bureaus and request that they place a fraud alert on your credit report. If you reach out to Equifax Inc., Experian or TransUnion, they will set a fraud alert on your credit report. The bureau you informed will notify the other bureaus to follow suit.
What happens when a lender sees a fraud alert?
You can still receive a loan or line of credit if you have a fraud alert on your credit, but the lender will have any applicant go through extra hoops. It will take longer to obtain credit because the lender has to conduct additional due diligence to verify your identity.
What to know about placing a fraud alert on your credit report
Most people don’t expect to place a fraud alert on their credit reports. If you feel nervous about your identity or see suspicious activity on your report, you may have to place that alert on your credit. Here are some details to know in case you need to place a fraud alert on your credit report.
Placing a fraud alert is free
Credit bureaus will not charge an additional fee for your fraud alert. It’s a free service designed to keep your credit and finances safe from imposters.
There are three different types of fraud alerts
Consumers can choose among one of three fraud alerts. Short-term fraud alerts do not require additional action after you have contacted one of the credit bureaus. Any other fraud alert will require that you submit a police report or an identity theft report. Active-duty military members can also submit fraud alerts so no one uses their credit while they are serving the country.
You can remove a fraud alert at any time
The credit bureaus handle everything once you reach out to them, but what happens when you want to remove a fraud alert? You may feel safer after a few weeks or have returned from active duty. You will have to call one of the major credit bureaus and provide them with acceptable documentation to prove your identity. A valid driver’s license, Social Security card, birth certificate and passport are some of the documents credit bureaus will approve. If you notify a major credit bureau and get your fraud alert removed, the other two will follow suit and remove the fraud alert.
You only have to notify one major credit bureau
Consumers don’t have to notify all three major credit bureaus. If you inform one of the major credit bureaus, the other two will know soon enough. You won’t have to do additional work to get the fraud alert on all three credit reports.
A fraud alert won’t affect your credit score
Placing a fraud alert on your credit will not impact your score. However, you should pay attention to movements in your credit score and review your report. The fraud alert won’t affect your score, but fraudulent activity and unaddressed credit lines can hurt your score.
Fraud alert vs. credit freeze
Fraud alerts allow you to still use your credit but require lenders to take additional steps to verify your identity. While this process will increase how long it takes to obtain loans and lines of credit, it offers an extra layer of protection. Credit freezes are a last resort that will block anyone from using your credit report. No one can borrow money through your credit report, but you are still responsible for current loans and lines of credit.
Will a credit freeze or fraud alert hurt my credit score?
A credit freeze will not hurt your credit score. Credit freezes restrict anyone from using your credit report to get financing, but it does not affect the contents of your credit report. You will still have to make payments on existing debt. Missed payments can hurt your score during a freeze because they will still show up on your account.
Keep Your Credit Safe
A fraud alert can keep your credit safe by adding an identification verification process to each credit application. If you see suspicious activity on your credit report, you should place a fraud alert and contact the authorities.
What happens if you apply for credit with a fraud alert?
If you apply for credit with a fraud alert, the lender will follow additional steps to verify your identity. It will take longer to get approved for credit, but you can still obtain funding.
What is an extended fraud alert?
An extended fraud alert stays on your credit report for seven years. This fraud alert is reserved for victims of identity theft.
Will a fraud alert affect my credit score?
A fraud alert will not affect your credit score.