How these 3 credit protection tools help prevent fraud
You may see terms like fraud alert, credit lock and credit freeze used interchangeably. Although they offer similar protection against identity theft, there are a few differences. Let’s explore the three tools and when you might want to activate these to protect your personal information.
Fraud alert
If you have been part of a data breach or suspect identity theft or fraudulent activity, you may want to place a free fraud alert on your credit files.
A fraud alert does not restrict access to your credit reports. It’s more like a red flag that alerts companies to check with you before opening a new credit account in your name. Typically, a business will call you to confirm the activity is really you.
There are three types of fraud alerts:
- Basic fraud alert - Anyone can place this type of alert. It lasts for just one year, but it is renewable.
- Extended fraud alert - This alert is only available to victims of identity theft. It requires that you file a report with the federal government through identitytheft.gov or with the police. It lasts for seven years.
- Active duty alert - As the name suggests, this is for military members only. It lasts one year. After that time, you can extend it for the length of your deployment.
You can contact any of the three credit bureaus (Equifax, Experian, or TransUnion) to set a fraud alert. The one you contact must notify the other two. Additionally, with both the extended and active duty fraud alerts, the credit bureaus will remove you from marketing lists for pre-screened credit and insurance offers (unless you request otherwise). This lasts for two-five years.
Credit Freeze
With a credit freeze, you essentially lock down your credit file. This helps you thwart identity thieves trying to open accounts in your name because credit card companies and other creditors can’t access your credit report, which is typically required to issue new credit.
This can be a good move if:
- You’ve been a victim of identity theft
- You’ve been part of a data breach
- You’d like more control over your credit files
You can place a credit freeze at any time. It’s free and most states allow it to stay in place until you remove it. You will need to contact each of the three credit bureaus to place a freeze on your credit, which you can do online, by phone or by mail. Once the freeze is active, you'll receive a unique personal identification number (PIN). You’ll need that PIN when you decide to unfreeze your credit. For example, if you want to apply for a loan or a credit card.
It’s worth noting that certain businesses may want to check your credit history, requiring you to unfreeze your credit file. This may happen when applying to rent an apartment, signing up for a new utility, or even getting a new cell phone plan. To unfreeze your credit, you will need to contact each of the three credit bureaus. If you do so online or by phone, the Federal Trade Commission (FTC) gives the bureaus one hour to complete the request. If you do so by mail, the FTC gives the bureaus up to three days.
Credit Lock
Like a credit freeze, a credit lock restricts access to your credit file, protecting you from potential identity theft. Credit locks are typically controlled through a mobile app where you can quickly turn it on and off – making it more convenient than a credit freeze.
Each bureau has its own credit lock program and/or app, so you’ll have to register with all three programs and set up a profile. Equifax and TransUnion have free options, but Experian charges a fee.
A fraud alert, credit freeze and credit lock are all valuable tools to understand and use to protect your personal information. Here is a quick summary:
- Fraud alert - This free tool doesn’t restrict access to your credit file, but it will alert the creditor to check with you before opening a new credit account in your name.
- Credit freeze – This is a free way to restrict access to your credit file, but when it comes time to apply for a loan or other services that require a credit check, it may be cumbersome to unfreeze.
- Credit lock – This is a more convenient way to restrict access to your credit file, but you’ll need an account with each bureau to participate in its credit lock program, which may also involve fees.
To learn more, check out this post from the Federal Trade Commission. Or this one about deciding which protection is right for you. As always, if you have any questions, don’t hesitate to reach out to any of our friendly bankers.
