Identity theft is awful, but not uncommon. Nearly one out of every five consumer complaints to the Federal Trade Commission in 2010 concerned identity theft. If you’ve been a victim, then you know firsthand the kind of stress it causes, the time it takes to clear up fraud, and the financial and emotional costs. Not least, having your identity stolen can hurt your credit score -- that's why we bring you advice on how to protect yourself. You can start by taking preventive action and then work through our ways to raise your credit score.
Fortunately, when it comes to your credit identity, there’s more than one way to protect yourself if you suspect your identity may have been stolen. Both a fraud alert and credit freeze are security measures that you can put into place to protect yourself and your credit. However, they both affect your credit in different ways. Let’s take a look at each one.
What Is a Fraud Alert?
A fraud alert tells a company, such as a credit card issuer or mortgage provider, to contact you before reviewing your credit to verify that you authorized the activity.
This is a great tool for those who think they might be a victim of identity theft or want to put a safeguard in place if they feel they may be vulnerable.
There are two types of fraud alerts, both of which are free to place. An initial fraud alert lasts for 90 days and is placed when you suspect you may have been a victim of identity theft, but you don’t have to prove your case to place the alert. Extended fraud alerts last seven years. In order to place one, you must be able to prove that you’ve been a victim of identity theft and have a police report proving your case.
How to Place a Fraud Alert
Contact one of the credit bureaus to request that a fraud alert be placed on your file. The bureau you contact is required to contact the other two credit bureaus to inform them of the alert. Here’s how to contact each credit bureau:
Equifax: 1-800-525-6285; www.equifax.com
Experian: 1-888-EXPERIAN; www.experian.com
TransUnion: 1-800-680-7289; www.transunion.com
For more information on fraud alerts, check out the Federal Trade Commission’s website.
A credit freeze—also called a security freeze—prevents new inquiries into your credit. Therefore, any individual attempting to open a new line of credit in your name will be unable to do so unless you temporarily lift the freeze. Credit freeze laws are set on a state-by-state basis. While some states make credit freezes free for victims of identity theft, there is sometimes a fee—typically up to $10 per bureau.
This measure is put in place by those who have been victims of identity theft or recently had fraudulent accounts taken out in their name. Placing a credit freeze allows the victim the time needed to deal with any fraudulent accounts or activity.
Credit freezes are considered higher protection than fraud alerts because only the person who placed the credit freeze can remove it with a PIN they received when the freeze was initiated. Also, there’s no time limit on how long a credit freeze can remain on your credit file, so you can keep it in place for as long you'd like. Just keep in mind that, in most states, a credit freeze comes with a fee, unlike a fraud alert.
How to Initiate a Credit Freeze
Unlike a fraud alert, you must contact all three credit bureaus to initiate a credit freeze on your file. First, check out your state’s credit freeze laws. Then, go to each credit bureau’s website to find out how to initiate a credit freeze based on your states guidelines:
You can read more about credit freezes and how they affect your credit at the FTC’s website.
More Ways to Protect Your Identity
Avoid being a victim of identity theft in the first place by keeping your personal information safe and following some tried-and-true methods of protection:
- Lock your smartphone.
- Share personal data cautiously online.
- Monitor your financial accounts.
- Safeguard your accounts by creating the perfect password.
- Check your free credit report on a regular basis.
Credit Karma™ is a completely free credit management service that provides free credit scores, financial education, and personalized savings recommendations. We help more than 3 million consumers realize the everyday cost savings of having a good credit score.