Should you take this step to keep fraudsters from getting loans and credit cards in your name?

3 minute read

Are you worried that your sensitive, personal information was exposed through a data breach? Maybe you lost your wallet, which had your credit cards and Social Security card in it. Whatever the case, if you’re concerned that someone may try to fraudulently obtain loans, credit cards, or other credit under your name, you may want to place a fraud alert on your credit.

A fraud alert places a notice on your credit reports, informing creditors that you either are – or could be – a victim of fraud or identity theft.

The fraud alert makes it hard for someone to fraudulently open an unauthorized credit account under your name by forcing lenders and creditors to take extra steps such as contacting you by phone to verify your identity before approving credit applications.

Find out what you need to know before placing a fraud alert on your credit below.

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1. Placing a fraud alert on your credit reports is free

It’s easy and free to request a fraud alert with any of the three major credit reporting agencies. You can place a fraud alert on your credit in just a few minutes online with the three major credit bureaus: Experian, TransUnion, and Equifax.

2. A fraud alert won’t “freeze” your credit

Before you place a fraud alert or a credit freeze on your credit reports, make sure you know the difference between those two types of credit protection offered by all three major credit reporting agencies.

When you place a fraud alert on your credit reports, creditors must first verify your identity before processing a credit application under your name. That’s much different than a credit freeze, which completely blocks creditors from accessing your credit report.

Find out: Here’s What Happens When You Freeze Your Credit

3. There are three different types of fraud alerts

Anyone can place a one-year, temporary fraud alert on their credit without providing documentation such as a police report for identity theft. If you suspect someone that someone is fraudulently trying to access your credit but have no proof, a temporary fraud alert can help prevent future identity theft or credit fraud.

If you’ve already been the victim of identity theft, you may want to request an extended fraud alert, which stays on your credit report for seven years. However, unlike with a temporary fraud alert, you must submit a copy of a police report or other valid identity theft report when requesting an extended fraud alert.

A third type of fraud alert is an active-duty military fraud alert, a one-year fraud alert for service members deployed overseas. With an active-duty fraud alert, creditors aren’t required to contact you to verify your identity before approving credit but must verify your identity in some other way first. With this alert, however, you can choose to add a phone number where you can be reached to verify your identity.

4. You only have to notify one major credit bureau

With a credit freeze, you must notify each of the three major credit reporting agencies. However, that’s not necessary when you place an initial fraud alert on your credit report.

“When you request an initial fraud alert to be added to your credit file with any of the three major credit reporting bureaus (Experian, TransUnion, or Equifax), the bureau you contact will notify the other two and alerts will be added on your credit files there as well,” according to Experian.

5. A fraud alert won’t affect your credit score

Placing a fraud alert on your credit reports will have no effect on your credit score, according to TransUnion. At the same time, however, the fraud alert could prevent someone else from obtaining credit under your name and subsequently harming your credit score by defaulting on loans or credit cards.

Find out: What Has the Biggest Impact on Your Credit Score?

6. You can remove a fraud alert early

If you want to remove the fraud alert before it expires, no problem. When you request the removal of a fraud alert, you will need to upload or mail documentation verifying your identity to the credit bureau. Unlike when you placed the initial fraud alert, you must contact each of the three credit reporting agencies separately to remove the alert.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC