In this guide, we’ll explain how to set up fraud alerts for free with any of the Big 3 credit bureaus in the US. We’ll also cover why fraud alerts may not be enough and tell you about credit freezes, important fraud alert facts, and more.
A fraud alert is a way to alert third parties that your identity has been compromised – or that you’ve been a victim of fraud. There are a few types of fraud alerts, and knowing how to use them correctly can protect your finances, help you recover from crimes committed against you, and otherwise make your life better and easier. But before we start getting in-depth, we’ll open by going over the basic definition of a fraud alert.
- 1 What is a fraud alert?
- 2 Fraud alerts vs. credit freezes
- 3 5 things to know about fraud alerts
- 4 Why are fraud alerts necessary?
- 5 How to set up a fraud alert
- 6 In closing
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What is a fraud alert?
A fraud alert is a short byline in your credit report that indicates that you may be a victim of credit fraud or identity theft. It’s of interest to yourself because it can protect you from financial losses. It’s also of interest to banks, insurers, medical care providers, and other third parties because it minimizes their risk of facilitating crime and fraud. There are several main types of fraud alerts. We’ll explain how you can set them up in a minute – but for now, just remember that this is how they work.
- Initial fraud alerts. The idea behind an initial fraud alert is to keep you safe for a few months after your identity may have been compromised. They work for 90 days and can be extended or repeated once for about 6 months (180 days) of fraud protection.
- Extended fraud alerts. These can last 7 years – but unlike initial fraud alerts, you can’t place these over a mere suspicion. You can only apply them if your identity has been stolen and after filing an identity theft report with the FTC.
- Active duty alerts. These are available to US military members on active duty. It requires lenders and other third parties to verify your identity before granting you credit. It can include a phone number where you can be reached for various verifications. In most cases, a credit bureau will also opt you out of pre-approved offers while you’re on active duty.
Depending on your state and the credit bureau you go through, you may be required to provide extra information – for example, by filing a report with the police or by leaving clear instructions on how your approval should be sought out while you’re on alert.
Fraud alerts vs. credit freezes
A fraud alert is a note placed on your credit file for 90 days, 1 year, or up to 7 years – depending on the fraud alert type you choose. This note lets third parties know to take extra steps when approving you for credit. It’s available from all three credit bureaus – Experian, Equifax, and Transunion – and is universally free. It’s an excellent way to minimize the likelihood of crime and fraud while retaining access to credit. One thing that fraud alerts don’t do is stop companies from giving you credit. If you’re concerned that someone may have enough information to take credit our in your name despite a fraud alert, there’s a second option: the credit freeze, also known as a security freeze.
A security freeze stops all future access to your credit report. It makes it completely impossible for any third party to receive it from credit bureaus. This is very convenient if you know with a high degree of certainty that someone might defraud you. It’s also a prudent step if you’re in the process of being defrauded and want to cut your losses immediately. However, a security freeze does stop you from taking money out, as well as getting insurance services – so if you’re about to apply for insurance, a mortgage, etc, you may want to opt for a fraud alert instead. As a compromise, consider asking for a PIN-protected security freeze wherein you can give temporary access using a special code.
5 things to know about fraud alerts
Here are a few things most people don’t know about fraud alerts.
- It doesn’t matter which credit bureau you contact. Experian, Equifax, and Transunion are obligated (by law) to tell each other about fraud alerts. This means you only need to contact one of them for all 3 to place you on fraud alert. This is helpful to remember because time is always of the essence when your security and identity have been compromised.
- A fraud alert requires third parties to take extra steps to verify who you are before giving you credit. The bad news is that this means that if you already have an open line of credit that’s been compromised, you won’t be protected by a fraud alert–you’ll have to call your bank or lender instead. The good news is that this means that banks, insurers, and others will work hard to make sure they don’t give out credit in your name to a criminal.
- Extended fraud alerts require paperwork; regular ones don’t. If you want to apply for a regular 90-day fraud alert, you can do so at any moment. If you want an extended fraud alert, you’ll have to prove that you’ve been a victim of fraud or identity theft. This means getting a police report or an FTC identity theft report that verifies what happened is critical for extended alerts.
- It doesn’t matter whether you use phone or mail. All 3 credit bureaus make it easy to create, update, and remove fraud alerts by phone or by mail. You don’t have to wait for physical letters to reach their offices; you can use the phone to verify your identity beyond the shadow of a reasonable doubt and put yourself on fraud alert that way.
- You can delegate your fraud alert management to someone else. You can assign a personal representative to manage your fraud alert on your behalf. This usually means using a court appointed document or giving someone Power of Attorney. Your personal representative can do most of what you can – add and update fraud alerts, amend your contact information, etc – so make sure you only use this feature with someone you trust.
Why are fraud alerts necessary?
People assume that they’ll immediately find out if someone tries to use their identity without their knowledge. After all, how could someone get a loan, get hired, or face a crime using your identity otherwise? The very idea can seem absurd. Unfortunately, the reality is a lot different than our expectations. To understand why here’s an example of how identity theft works. Let’s say someone gets a hold of your name, Social Security Number, and address. This is enough to take out credit in someone’s name in many states – especially if the perpetrator has a fake ID that looks real enough to discourage questions. Now here’s what happens next. Having taken credit out in the victim’s name, the criminal uses a different address, e-mail address, and phone number.
This means that the identity fraud victim has no way of knowing about what happened since all the communications now go to the criminal. Many people only realize what’s going on when a federal agency, bank, or private company calls on them to – for example – pay back an overdue loan or report taxes on income that one hasn’t earned. By this point it’s, unfortunately, almost always too late to catch the offender and reverse the damage they’ve done.
This is why fraud alerts are necessary. They let you completely shut down a criminal’s ability to get new credit in your name by creating extra steps that make it hard for anyone other than yourself to do so. In other words, they help you proactively protect yourself and your money rather than react to crimes after they happen. This is what makes them so valuable. Fraud alerts are especially useful if you anticipate being out of reach, e.g. traveling abroad or on active duty, since they make it difficult for a fraudster to leverage your absence to their own benefit.
How to set up a fraud alert
First thing’s first: you don’t have to set up a fraud alert with each of the big 3 credit agencies. It’s enough that you use a phone call or website to let one agency know what happened. Doing so is simple. Just visit Equifax, Experian, or TransUnion and follow the on-screen prompts to go to their fraud alert section. Once there, keep following instructions to choose the exact kind of fraud alert you need – and activate it. After that, you’ll get further instructions that tell you what to do next, how you can cancel a fraud alert, etc. The process is as simple as going to these websites and following instructions; nothing complicated for you to worry about.
Now you know how to set up fraud alerts and complement them using identity checking services. What are you going to do with what you learned from this article? Leave a note below and let us know now!