With the most recent Equifax breach that revealed 143 million American’s social security numbers and birth dates, many are considering strategies to protect themselves from identity theft. The two main options that are available to us are fraud alerts and credit freezes. Often, these two get confused, but they are two different methods of protecting your credit. Determining which one is best for you really comes down to your current financial situation. However, if you are part of that 143 million, then it would be best to take action with one of these protections.
What is the Difference Between a Fraud Alert and a Credit Freeze?
Of the two options, a fraud alert is not as restrictive as a credit freeze according to Consumer Reports. A fraud alert is attached to your credit report which notifies any potential lenders that you are a victim of identity theft. This will inform them that they should track down further identify verification to ensure that they are approving credit to the right person.
A typical fraud alert will last 90-days and will have to be renewed. However, if you are a victim of identity theft, then you can increase the duration of the fraud alert to seven years. The benefit of doing the 90-day fraud alert is that whenever you renew the fraud alert you can get a free credit report, allowing you to watch your credit closely.
If you feel that a fraud alert is not enough protection, then you can consider a credit freeze. This prevents most lenders from accessing your credit report. The benefit of this is that if they can’t access your credit report, they cannot approve someone for a loan in your name if this individual is trying to steal your identity.
Naturally, the downside to a credit freeze is that it also keeps those that you want to do business without. So, if you are in the process of getting approved for a loan to buy a house or a car, then you will have to lift the freeze temporarily to get approved for the loan. Furthermore, the freeze may not be free. Depending on where you live, you may have to pay a small fee. According to Experian, fees are waived for victims of identity theft if they have procured a valid investigative report into the matter.
How to Initiate and Terminate Fraud Alerts and Credit Freezes
If you wish to initiate a fraud alert then you only need to contact one of the three major credit bureaus—they are required to notify the other two of the fraud alert. You can contact them either by phone or online. To initiate a credit freeze, you will have to contact each of the three credit bureaus individually at their credit freeze portals according to “Fraud alert or credit freeze—which one is right for you?” If you don’t plan on making any major purchases anytime soon, then a credit freeze may seem more appropriate. But if you do plan on making any major financial purchases, then it is probably better to go with a fraud alert.