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How to Set Up a Fraud Alert for Your Credit

, by Rob Kaufman

A fraud alert is basically a "red flag" that alerts creditors of the fact that you might be (or have been) a victim of identity theft. Even if you haven't been a victim, a fraud alert encourages third parties to verify your identity before extending credit.

The pros of having a fraud alert?

  • There is no charge for a fraud alert, so you can "renew" your alert as often as you'd like without paying a fee (alerts expire after one year).

  • Depending on the type of fraud alert you place on your report, you can get at least one free credit report from all three credit reporting agencies.

  • Adding fraud alerts (and receiving the free credit report) do not impact your credit score.

The cons of having a fraud alert?

  • Not all creditors will pay attention to the alert, so there's no guarantee they will verify your identity if someone attempts to open an account in your name.

  • Credit applications may be delayed because the fraud alert adds an extra step in the approval process.

Fraud Alert Setup - Easy as 1-2-3

Once you've decided a fraud alert is right for you, here are the steps you need to take:

  1. Choose the credit bureau with which you want to submit your fraud alert application. (TransUnion, Experian or Equifax).

  2. Complete the fraud alert form for the bureau you chose. You only need to submit a completed form for one bureau in order for them to notify the other two. Here are the links to each bureau's form: Equifax TransUnion Experian

  3. Make sure to keep a printed or written copy (or bookmark the web page) that explains the specific bureau's procedures for extending or removing the alert.

Fraud Alert vs. Credit Freeze - Don't Confuse the Two

As stated above, fraud alerts help ensure that a business must try to verify your identity before extending new credit. For example, that could mean a credit card company would actually call the store at which you (or an identity thief) are trying to open a new account. Once they verify it's really you, they can approve your new credit card.

A credit freeze means that access to your credit report - including by you - is not allowed when trying to open a new account. When you place a freeze on your credit, you will receive a PIN. This PIN must be used each time you want to unfreeze or refreeze your account. As you can see, it's provides additional security to your credit report, but can be an annoyance when trying to open a new credit account.

If you want to put a credit freeze in place, you must contact all three credit bureaus individually using their credit freeze forms located on their site. Remember... if you're thinking about applying for new credit (i.e. an auto loan, mortgage, etc.), you might want to think twice about putting a freeze on your credit. However, if you're certain you won't be applying for credit anytime in the near future, it's something to consider to help protect your credit.

See some fraud alert and credit freeze experiences of myFICO members at myFICO forums. As always, there's a positive and negative side to everything!

Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.