A fraud alert notifies creditors that you may be a victim of identity theft and instructs them to verify your identity before approving any new credit in your name. This added layer of security helps prevent unauthorized accounts from being opened using your personal information. Fraud alerts are free to place, and once you set one up with any of the three major credit bureaus, they will notify the other two, ensuring that the alert is added across all your credit reports.

How Does a Fraud Alert Work?

A fraud alert serves as a red flag for creditors, signaling potential identity theft. When a lender or creditor receives an application in your name, they are required to take extra steps to confirm that you are the person making the request. This verification process may include calling you at a phone number you provide when setting up the alert.

If the creditor cannot confirm your identity, they may deny the application, effectively blocking fraudsters from opening new accounts in your name. Fraud alerts are useful for individuals who suspect they have been targeted by identity thieves or whose personal information has been exposed in a data breach.

Types of Fraud Alerts

There are three types of fraud alerts, each designed for different situations. The best option depends on your specific circumstances.

Initial Fraud Alert

• Duration: 1 year
• Who Can Use It: Anyone who believes they may be at risk of identity theft
• How It Works: Creditors must take reasonable steps to verify your identity before granting new credit
• Additional Benefits: Removes you from prescreened credit and insurance offers for six months

Extended Fraud Alert

• Duration: 7 years
• Who Can Use It: Individuals who have been victims of identity theft
• How It Works: Creditors must contact you by phone or in person before issuing new credit in your name
• Additional Benefits: Removes you from prescreened credit and insurance offers for five years

Active-Duty Fraud Alert

• Duration: 1 year
• Who Can Use It: Active-duty military members
• How It Works: Creditors must take reasonable steps to verify your identity before granting new credit
• Additional Benefits: Removes you from prescreened credit and insurance offers for two years

All three types of fraud alerts can be renewed, but extended and active-duty fraud alerts may require supporting documentation to confirm eligibility.

Fraud Alert vs. Credit Freeze

While fraud alerts notify creditors to take extra precautions, credit freezes prevent lenders from accessing your credit report entirely. Understanding the differences can help you decide which option provides the best protection.

Fraud Alerts

• Cost: Free
• Effect: Creditors must verify your identity before granting credit
• Impact on Credit Report Access: Credit reports remain accessible to creditors
• Expiration: 1 or 7 years, depending on the type
• Requirement to Lift for New Credit: No

Credit Freezes

• Cost: Free
• Effect: Prevents new creditors from accessing your credit report
• Impact on Credit Report Access: Blocks access to your credit report unless you unfreeze it
• Expiration: Does not expire unless removed
• Requirement to Lift for New Credit: Yes

A fraud alert is best for those who suspect potential fraud, while a credit freeze is ideal for those who want to block access to their credit entirely.

When Should You Place a Fraud Alert?

Adding a fraud alert to your credit report is a good idea in several situations. You should consider placing an alert if:

• Your personal information was exposed in a data breach
• Your wallet, ID, or personal documents were lost or stolen
• You notice suspicious activity on your credit report
• You have reported identity theft to law enforcement
• You are an active-duty service member and want extra protection

With the rise of data breaches exposing millions of Social Security numbers, it is wise to assume that your personal information could be at risk. A fraud alert adds an extra layer of security to help prevent unauthorized accounts.

How to Place a Fraud Alert

Placing a fraud alert is free and straightforward. You only need to request it with one of the three major credit bureaus, and they will notify the other two.

To set up a fraud alert, you can:

1. Visit the website of any of the three credit bureaus.
2. Follow the instructions to submit a fraud alert request.
3. Provide the required identification details and confirm your request.
4. Receive confirmation that the fraud alert has been added.

For extended fraud alerts, you may need to provide a police report or an identity theft report as proof of fraud.

How to Remove a Fraud Alert

Fraud alerts automatically expire after one or seven years, depending on the type. However, if you want to remove an alert before it expires, you must contact each credit bureau separately.

To remove a fraud alert:

1. Contact each of the three major credit bureaus.
2. Provide identification to verify your request.
3. Confirm that the alert has been removed from all three reports.

Does a Fraud Alert Affect Your Credit Score?

Placing a fraud alert does not impact your credit score. However, it may slow down the approval process when you apply for new credit, as lenders must verify your identity before proceeding. If you are actively applying for loans or credit cards, you should be prepared for potential delays.

While a fraud alert does not hurt your credit, identity theft can. If a fraudster opens an account in your name and fails to make payments, it can negatively affect your credit history. Taking preventive measures like fraud alerts and monitoring your credit regularly can help protect your financial reputation.

Stay Proactive About Credit Protection

Fraud alerts can help reduce the risk of credit fraud, but they are not a substitute for regular credit monitoring. Checking your credit reports often and keeping an eye out for any unusual activity can help you catch potential fraud early. Additionally, consider using identity theft protection services that monitor for unauthorized use of your personal information.

Taking steps to protect your credit now can save you from the hassle of dealing with fraud later. Whether you choose a fraud alert, credit freeze, or regular monitoring, being proactive is key to safeguarding your financial future.

If you ever need expert assistance or guidance on your credit journey, don’t hesitate to reach out to the Nerds! Additionally, stay updated with the latest tips and information by following us on Facebook, Instagram and TikTok!