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Lessons and stories from the front lines of fighting identity theft.

 

The Difference between Credit Alerts and Credit Freezes

Oct 07

PMID_CreditFreezevsReport

Fraud is one of the most serious things that can do damage to your credit. Just like a physical injury to your body, the harm that results from fraud can require minimal treatment or major surgery. Just as you can take steps to strengthen yourself through proper training, clothing and equipment, you can take steps to protect your credit from thieves and fraudulent activity. Identity thieves try to steal identities by seizing names, credit card numbers and Social Security numbers and other available personal data, either physically or on the web.

Consider the following statistics from the Bureau of Justice in 2013:

  • Among people age 16 or older, about 7% fell victim to identity theft in 2012
  • The majority of identity theft instances, 85%, involved the victim’s credit card or bank account information
  • Over half of identity theft victims resolved their problems in a day or less, but where personal information was stolen, 29% of the victims spent a month or more resolving issues

An Identity Theft Assistance Center (ITAC) study reveals that one in 40 respondents had a child under the age of 18 who was a victim of identity fraud. Child identity theft can be particularly damaging because it can go undetected for years. The victim may only become aware when applying for a credit card or a student loan, many years after the initial theft of information occurred. But there is a solution. A fraud alert and security freeze can help protect the future credit of your children now; a benefit they’ll reap as they establish credit on their own.

Fraud Alerts

A fraud alert is a message placed on your credit report that notifies creditors to verify your identification whenever a credit extension is requested in your name. There are three types of fraud alerts:

  • Active Military Duty Alert – This alert is specifically for military personnel to have in place while deployed. Credit protection is offered for a full year. Your name is removed from any preapproved credit card offers, and insurance prescreening is nullified, as well.
  • Initial Fraud Alert – If you are a victim of, or have concerns of becoming a victim of, identity fraud, this initial alert can offer protection for 90 days.
  • Extended Fraud Alert – Identity theft victims are granted the option of extending an initial fraud alert. Protection is offered for seven years. In order to place an extended alert you must first file a police or other valid identity theft report.

Security Freezes

A security freeze can greatly restrict access to your credit report by third parties, such as credit grantors. Potential new lenders cannot access your credit file unless you first lift the freeze. This provides an added insurance that identity thieves will likely be unable to open a fraudulent account in your name. Regulations for placing a freeze differ from state to state.

Be mindful that a security freeze can still allow disclosure of your credit file to companies that you have an ongoing relationship with, such as mortgage, or credit card companies or mobile phone service providers. If you are working with a collection agency, they will continue to have access to your credit file as well. The security freeze remains on your file until you decide to lift it.

Your identity is worth protecting. Be vigilant and take every precaution.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc., an Experian company.   © 2014 ConsumerInfo.com, Inc.  All rights reserved.

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