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A fraud alert is a free notification you can add to your credit report, instructing anyone receiving a credit application in your name to verify your identity before processing the application.
What Does a Fraud Alert Do?
The purpose of a fraud alert is to add a layer of security to the loan application process, with the goal of preventing criminals from opening bogus credit accounts or taking out loans in your name. The first step that typically occurs when a creditor processes your credit application is a credit check, and that requires access to your credit file at one of the national credit bureaus (Experian, TransUnion or Equifax). A fraud alert pauses the credit check process and instructs the creditor to confirm your identity before it accesses your report.
Requesting a fraud alert at any one of the credit bureaus automatically applies alerts to your credit files at all three bureaus. Each fraud alert deactivates itself on a preset expiration date. You can have a fraud alert lifted before its expiration date if you wish, but you must contact each credit bureau individually to do so.
There are three types of fraud alerts, and you have the right to request any one that applies to you:
- A temporary fraud alert. Also known as an initial fraud alert, this type of alert lasts one year and then expires. You can add one to your credit report anytime, for any reason. You can renew it as many times as you like.
- An active-duty fraud alert. This alert protects active-duty service members on assignment away from home, and also lasts one year unless it's removed earlier.
- An extended fraud victim alert. Extended alerts last seven years and are designed for victims of credit fraud or identity theft. If you've been victimized and have reported the crime to authorities, you can obtain an extended fraud alert by submitting a copy of the identity theft report you filed with law enforcement.
Does a Fraud Alert Affect Credit?
A fraud alert has no impact at all on the contents of your credit report, or on the credit scores derived from the data stored in your credit report. It therefore can neither help nor hurt your ability to qualify for a loan or credit card.
A fraud alert can hinder your ability to get instant approval for credit card or in-store credit offers you encounter online or at retail outlets. The automated approval systems used for these offers may not be equipped to handle the identity-confirmation steps fraud alerts require. So while you cannot not be disqualified for a credit offer due to a fraud alert, you may have to contact retailer reps by phone or in-person to complete your application.
When Does It Make Sense to Get a Fraud Alert?
A fraud alert is a good precaution to take if you're worried about potential misuse of your personal information. If you suspect your credit card number or Social Security number has been stolen or exposed in a data breach, for instance (or if you'll be on a military assignment and unlikely to be monitoring your credit activity closely), placing a fraud alert is a good way to quickly add a measure of security to your credit files. You only need to notify one credit bureau to activate one, and it's only slightly more time-consuming to deactivate fraud alerts than it is to put them in place.
In addition, a fraud alert can prevent unauthorized access to your credit files without significantly hindering authorized access to them. It's easy to remove fraud alerts if you discover your data was not compromised, or to just let them lapse if you find you aren't getting any indication that fraudsters are applying for credit in your name.
If you're certain your data has been compromised and you're seeking an extended fraud victim alert, you may want to consider a credit freeze instead. A credit freeze is a more severe measure—it limits access to your credit report unless you remove it or authorize temporary access to your files, and it never expires unless you remove it. A credit freeze can be inconvenient for individuals who are actively applying for new loans or credit cards, but it can be useful for those who don't soon plan to seek new credit, and don't want to worry about renewing a fraud alert upon its expiration.
How to Place a Fraud Alert
Placing a fraud alert at any of the national credit bureaus automatically attaches notices to your credit files at all three bureaus.
To place a fraud alert through the Experian Fraud Alert Center, visit the webpage, select the type of alert you want, and follow the instructions on how to upload or mail in copies of necessary proof of identity.
You'll need to provide:
- A copy of a state-issued photo ID
- Proof of address, provided via a piece of mail such as a utility or insurance bill
- An identity-theft report, if you're seeking an extended fraud victim alert
A fraud alert is a useful option to keep in mind in case you feel your personal data has been compromised. It can protect against unauthorized access to your credit files without creating major obstacles to your ability to apply for credit yourself.