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What Is the Difference Between a Credit Freeze and Fraud Alert?

Whenever there is a data breach, consumer fears are heightened and the Equifax breach, where highly sensitive personal information of over 143 million Americans was compromised, is one of those high-anxiety events.

We have received many questions from consumers in the last week asking how they can protect themselves when their information is stolen in a data breach. Many of the questions are in the same vein:

What can I set up to help protect my credit and will a fraud alert and credit monitoring be sufficient or do I need to freeze my credit report?

What’s right when your identity is stolen—a credit freeze or fraud alert? The answer depends on where you are in your life stage, your current credit situation and pure personal preference.

Fraud Alert

A fraud alert is a temporary, 90-day alert that is placed on your credit file. Also known as an initial security alert, a fraud alert will display on your credit file so that when a lender pulls your credit report, they will be alerted that you are potentially a victim of identity theft. That company can then take extra steps to validate your identity before opening a new account.

A fraud alert is free at all three credit reporting agencies, Experian, Equifax and TransUnion. Once you request a fraud alert at one company, your fraud alert will be automatically added at the other two companies. The fraud alert expires after 90 days, but can be renewed at the end of the 90-day period.

You will not need an identity theft investigative report or any other documentation to initiate a 90 day fraud alert. It’s a simple process, and is a great alternative for those who want to be cautious, but not cut off their access to their credit report.

Extended Fraud Alert

An extended fraud alert is for people who have been victimized by identity theft and want to ensure that new accounts can’t be opened using their information. But, if managing a security (credit) freeze seems like more than you want to deal with, an extended fraud alert could be a valid option to consider.

Initiating an extended fraud alert requires you to provide proof of your identity, as well as an investigative or incident report filed with your local police department or sheriff’s office or with the Postal Inspection Service or Department of Motor Vehicles.

An extended fraud alert lasts for seven years. If you decide you do not need the alert for the full seven years, you can remove the extended fraud alert.

Security Freeze (Also Known as a Credit Freeze or File Freeze)

A security freeze will prevent potential lenders from accessing your credit report. Your credit report will only be accessible by unfreezing the account. If you are planning on applying for new credit in the near future, or if you have a transaction in process—such as a mortgage application—you might consider postponing the security freeze. In order for credit to be granted, you will need to unfreeze your credit report, which requires a Personal Identification Number (PIN).

With a security freeze, companies that rely on your credit report for decision making, such as banks, credit card companies and utility companies cannot pull a frozen credit report. Most of the time, this may result in the company not being able to extend credit because they will not have access to the essential data required to make an appropriate risk evaluation for extending credit.

Other Considerations for a Security Freeze

In addition to financial institutions, other types of companies use special reports that include credit report data to make decisions. For example, some employers use employment reports for background screening and tenant screeners use for credit reports rental properties. In order for these companies to get access to these reports, you will need to unfreeze your credit report.

Fees and requirements for adding and removing a freeze vary by state, however fees are waived for victims of identity theft with a valid investigative report. Credit freezes also have to be initiated at  each of the three major credit reporting agencies, and there may be a waiting period to unfreeze, so unfreeze at least three days before you apply for credit.

Unfreezing Your Credit Report

Unfreezing your credit report will require your PIN, and can be done permanently, for a specific time period or for a specific company or person. For example, if you want to apply for an auto loan through your credit report, you can unfreeze your report for just that credit union.

If you want the ability to lock and unlock your Experian credit report on the fly, Experian CreditWorksSM or Experian IdentityWorksSMmembers can do that through a product benefit called Experian CreditLock.

Company information for each of the credit reporting agencies is below.

Experian
P.O. Box 9554
Allen, TX 75013
1 888 397 3742
Visit Website
Equifax
P.O. Box 740256
Atlanta, GA, 30374
1 800 685 1111
Visit Website
TransUnion
P.O. Box 2000
Chester, PA, 19016
1 888 909 8872
Visit Website

Which identity theft protection method you use is completely up to you—here are more tips for what to do if your identity is stolen to help you decide your best course of action. But, the sage advice of what you do on a daily basis still stands.

  • Be vigilant about carefully monitoring of your bank and credit card accounts for any transactions you do not recognize.
  • Monitor your credit reports at all three credit reporting agencies, Experian, Equifax and TransUnion.
  • Watch for notifications, mail or phone calls about transactions, accounts, memberships or medical treatment that you did not initiate.
  • Don’t fall for phishing scams.
  • Use the latest guidance on passwords.
  • Take advantage of credit and identity theft monitoring products offered by the breached company, and monitor your credit reports at all three credit reporting agencies, especially for new account openings.

To quote the classic TV show, Hill Street Blues, “Let’s be careful out there.”

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Get Identity Theft Protection

Better detection and protection for identity theft and credit fraud. More identity and account alerts, with credit lock to prevent unauthorized inquiries.

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