Fraud Alert vs. Credit Freeze

Data hacks or breaches seem to happen all too often — and protecting your credit from thieves is a smart move. You may have heard about services that offer to place a freeze or an extended fraud alert on your accounts for better security. But did you know that credit freezes and credit fraud alerts are fundamentally different? Knowing how to use them can help you protect your sensitive data.

We’ll go over the differences between a credit freeze and an extended fraud alert. We’ll show you how they differ and how you can choose which one is right for you. Finally, we’ll introduce you to the benefits of tracking your credit, which you can do in the palm of your hand with Credit Builder Plus

What is a Fraud Alert?

A fraud alert is a warning that you can put on your credit information. In other words, anyone who attempts to view your credit report will see that you may be a victim of identity theft. Any company that opens an account under your name must contact you in some way to confirm that it’s actually you who is opening an account, usually via phone call or email. If the company cannot get a response from you, it will not open the account. 

There are two major types of credit card fraud alerts: an initial fraud alert and an extended fraud alert. The difference between the two is the amount of time that your credit remains under an alert. An initial fraud alert means that creditors will see an alert for one year. Extended alerts allow your creditors to see alerts for seven years.

You may remove a fraud alert any time you want. However, unlike other types of protections, not everyone can initiate an extended fraud alert. First, you must report any instance of identity theft or a data breach with the FTC. From there, you can add your fraud alert for free and remove it as you wish. You don’t need to be a victim of identity theft to place an initial fraud alert.

What is a Credit Freeze?

A credit freeze is similar to a fraud alert because it helps protect your information from falling into the hands of identity thieves. Freezing your credit means that you put a total lock on your credit. No one, not even you, can access it until you lift the freeze. Creditors and lenders can’t see any of your credit information or try to access your credit when you have a freeze. The lender must reject the application because credit pulls are a requirement for almost every card or loan application.

This also means that legitimate requests to open accounts won’t process when you have a credit freeze. You’ll need to individually “thaw” the freezes on each of your reports if you want to open a new account. You can do this by contacting the credit reporting bureaus online or over the phone to request a thaw. You can freeze and unfreeze your credit whenever you want, as many times as you want.

Many credit experts consider credit freezes to be the best way to protect your credit if your data’s been hacked. Some consumers who have had their identity stolen in the past leave their credit frozen 100% of the time, unfreezing only when they want to open a new account. Credit freezes are always free under the Fair Credit Reporting Act. 

Fraud Alert vs. Credit Freeze: What’s the Difference?

Fraud alerts and freezes are two commonly confused terms. Let’s take a look at some of the specific differences between the two.  

Usage Limits

You have the right to freeze and unfreeze your credit whenever you want under the Fair Credit Reporting Act. Though credit reporting bureaus have a few business days to service your request, they cannot refuse to freeze your credit because you recently froze it. A credit reporting bureau also can’t charge you for freezing or unfreezing your credit under any circumstance.

You can only put an extended fraud alert on your account if your data was in a hack or leak. First, you must mail or upload your Identity Theft Report, which you can find online at IdentityTheft.gov. Like credit freezes, fraud alerts are always free to place and remove. 

Length

There are two different types of fraud alerts and they both vary in length. An initial fraud alert will stick around on your credit reports for one year. An extended fraud alert will be on your reports for seven years. After that time, the credit reporting bureaus will automatically remove these fraud alerts from your report. You don’t need to call and request that they remove them unless you want the alert taken off before the expiration date.

There are no limits on the length of time that you can freeze your credit. A credit freeze lasts until you ask the credit reporting bureaus to remove it, whether it’s been one day or a decade. 

Ability to Open New Accounts

A fraud alert on your credit reports doesn’t stop you from opening new accounts. As long as you’re able to verify your identity when a creditor contacts you, you’ll be able to access your credit as normal. You don’t need to remove the alert before you attempt to take out a new loan, open a new card or use your credit in a new way. However, you do need to respond to identity inquiries in a timely manner. Otherwise, you might get an accidental rejection.

On the other hand, freezing your credit prevents anyone from accessing your credit report — even you. A credit freeze rejects any and all requests for your credit information, regardless of whether they’re legitimate or not. You won’t get a call from a creditor if you apply for a new account when you have a freeze. Instead, the creditor will simply reject your application. 

Want to open a new account when you have a credit freeze? You’ll need to unfreeze your credit by contacting each of the credit reporting bureaus.

How to Place an Extended Fraud Alert

Do you think that placing an extended fraud alert is right for you? Use the following steps to file your alert.  

File an Identity Theft Report

You need to file an Identity Theft Report before you can file an extended fraud alert. Visit IdentityTheft.gov and follow the steps to create a report. Once you file your report, you’ll get a copy of the Identity Theft Report you filed. Download the file and save in a safe place. 

Contact One of the Three Major Credit Reporting Bureaus

Contact one of the three major credit reporting bureaus and request a fraud alert after you have your Identity Theft Report. You’ll need to file your request via mail using the following steps.

Equifax

First, visit Equifax’s credit help center. Scroll down until you see the section titled “fraud alerts and active duty alerts.” Download the Extended Fraud Alert request form and print it out. Fill out the form with your personal information and package it together with a copy of your Identity Theft Report. Include one copy of an identity verification document and an address verification document. You can see which items qualify on the form. Then mail the package to the address listed at the bottom of the Extended Fraud Alert request form.

TransUnion

Visit TransUnion’s fraud alert help center. Scroll down until you see the section titled “Extended Fraud Alert — 7 years.” Click on the button in this section that says “Add Fraud Alert.” This will redirect you to TransUnion’s Extended Alert Request form. Download the form, fill out each section with your information and package it together with your Identity Theft Report Form, identity verification and address verification. Mail the package to the address listed at the bottom of the Extended Alert Request form.

Experian 

Find Experian’s fraud help center. Click on the button that says “add fraud alert.” Then, click on the button that says “Extended fraud victim alert — 7 years.” This will redirect you to Experian’s fraud alert form. Fill out the form and package it together with a copy of your Identity Theft Report, a copy of an identification document and a copy of your address verification document. Mail the package to the address listed at the bottom of the form.

Once you’ve mailed your package, all you have to do is wait. The credit bureau you choose must contact the other two bureaus and ask them to also place an alert on your reports under the Fair Credit Act. You don’t need to send more than one package.

How to Place a Credit Freeze

Think you might need a credit freeze? Here’s how to request your freeze.  

Request a Freeze Online or Over the Phone

You can file a request for a credit freeze over the phone or online:

Equifax: Equifax.com/personal/credit-report-services or 800-685-1111

Experian: Experian.com/help or 888-397-3742

TransUnion: TransUnion.com/credit-help or 888-909-8872

You’ll need to follow each bureau’s individual steps to access and freeze your credit profile. This process includes a few identity verification questions to prove that you’re accessing your own credit information. The credit reporting bureau will give you a PIN that you can use to freeze and unfreeze your credit more quickly in the future after you complete your verification. You’ll need to complete identity verification again if you lose your PIN. 

Contact the Other Two Bureaus and Repeat the Process

Unlike when you file a fraud alert, you’ll need to freeze your credit individually with each bureau. Once you finish contacting one bureau, move onto the other two. Remember to keep your PINs separate so you can unfreeze your credit later on. 

Benefits of Tracking Your Credit with MoneyLion

MoneyLion offers a comprehensive credit tracking service that anyone can use. You can view your score and monitor your credit changes. Credit tracking is included when you sign up for a Zero-Fee Checking account from MoneyLion or Credit Builder Plus. 

Protect Your Credit 

One of the best ways to keep identity thieves at bay is to carefully monitor and control your credit. You can protect both your personal data and your credit score by strategically monitoring freezes and fraud alerts.

Are you ready to get on the path toward a healthier financial future? Download the MoneyLion app today from the Google Play or Apple App store to learn more about how MoneyLion protects your credit.