Should I Add a Fraud Alert or a Credit Freeze to My Credit Report?

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Dear Experian,

There is an inquiry on my credit report where I do not recognize this merchant and I have not applied for credit. I have placed a freeze on my report. What else should I do?

- ACR

Dear ACR,

If you see an inquiry on your credit report that you do not recognize, you'll first want to determine whether it could be related to possible fraud or identity theft.

Your credit report has two separate sections of requests for your credit history: hard inquiries and soft inquiries. While it's possible that an unfamiliar inquiry could be an indicator of fraud, there are some other reasons why you may not recognize the name listed in the inquiry section of your credit report.

What's the Difference Between a Hard Inquiry and a Soft Inquiry?

Hard Inquiries

Hard inquiries listed on your credit report are the result of applications you've made to obtain credit. These inquiries can be seen by potential lenders and others with permissible purpose to view your credit history. While hard inquiries can have some effect on credit scores, any impact is typically minimal and temporary.

Sometimes, an inquiry may look unfamiliar because the company you applied with goes by a different parent company name or an abbreviation of their name when requesting credit reports. Similarly, you may apply for an account with a business but not recognize the name of the bank that finances their accounts. For example, a retail store may have its brand on a credit card, but it would appear on your credit report under the name of the bank that actually owns the account.

When applying for a car loan or home loan, the dealership or mortgage company may send your application to multiple lenders in an effort to find you the best rates and terms. As a result, you might see several inquiries within a short period of time by companies whose names you may not recognize.

Soft Inquiries

Soft inquiries are also listed on your credit report , but have no impact on your credit scores. They are reported as part of your personal credit report as a record of activity.

Soft inquiries are usually the result of preapproved offers that have been sent to you or a routine account review by a company with whom you already do business. They also occur when you check your own credit report. Inquiries for employment purposes and insurance are also soft inquiries.

Because you do not initiate all of the soft inquiries that can appear, you may not recognize all the business names listed in your soft inquiry section.

Is a Credit Freeze Always Necessary for Fraud Victims?

A credit freeze is a free tool available to help victims of identity theft protect themselves and their credit. Just keep in mind that when you have a freeze on your credit report, you will need to remember to lift, or "thaw," the freeze prior to applying for credit.

You'll also need to place and remove freezes separately at each of the three national credit reporting companies (Experian, TransUnion and Equifax). If you have had your personal information compromised and are worried about credit fraud, a credit freeze is not the only tool available to you.

Instead of a credit freeze, you might first consider adding a fraud alert, also called a security alert, to your credit reports. When you request an initial fraud alert, Experian will automatically share your request with TransUnion and Equifax.

What Should I Do if I Believe the Inquiry Is Related to Fraud?

If you determine that the inquiry is the result of fraud or identity theft, there are some steps you can take to help protect yourself:

  • Contact the lender who made the inquiry. Notify them that the inquiry is fraudulent so they can begin their own fraud investigation.
  • Add an initial fraud alert to your credit report. Experian will notify TransUnion and Equifax so they can add an alert to their files as well.
  • Review your credit report carefully for other signs of fraud. This might include an address you don't recognize or an unfamiliar account. Contact Experian to dispute any information you believe may be related to the fraud.
  • Consider filing a police report. Filing a police report gives you a record of the fraud. You may be asked to provide this report to creditors to assist in their investigation of any accounts opened or used fraudulently in your name. You will also need to provide a copy of this report to Experian should you wish to extend your initial security alert by adding a seven-year victim statement to your credit report.
  • Determine whether you need a security freeze. Freezing your credit file prevents potential new lenders from accessing your credit report without the freeze first being lifted by you. If you are planning to apply for credit in the near future it may be better to not freeze your credit file, or to postpone freezing it until you no longer need access to the credit marketplace. You also have the option to lift your freeze temporarily. You can freeze your Experian credit file for free.

Thanks for asking.

Jennifer White, Consumer Education Specialist

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