Fraud Alert and Credit Freeze - what's the difference?

I've personally make sure to watch my credit, understand what hurts or helps it and protect my identity.


I thought it was a great explanation from TransUnion of the difference between a Fraud Alert and a Credit Freeze along with the pros and cons. Take a minute to understand the different - you may never know when you might need to me armed with that information.


How is a fraud alert different from a credit freeze? 

A fraud alert can help prevent an identity thief from opening any accounts in your name. It means that lenders must take extra precautions to verify your identity before granting credit in your name. A fraud alert is the typical first step identity theft victims take.

A fraud alert initially lasts for 90 days but can be renewed indefinitely. You can also get an extended fraud alert, which stays in your credit report for seven years, if you can provide a police report or other official record showing that you've been the victim of identity theft. You can place a fraud alert with any of the three bureaus, and the bureau you contact will alert the other two. 

Fraud alerts don’t prevent an identity thief using your existing credit cards or other accounts. It also doesn’t protect you from an identity thief opening new accounts in your name that do not require a credit check – such as a telephone, wireless, or bank account. And, if there’s identity theft already going on when you place the fraud alert, the fraud alert alone won’t stop it.  

A credit freeze (or security freeze) offers stronger protection, by blocking access to your credit history. If you are very concerned about becoming a victim of identity theft, a security freeze may be right for you. This could discourage identity thieves from getting credit in your name because most legitimate lenders would not extend credit without first reviewing your credit history. A freeze may not be worth it if you're about to take out new credit, but can offer strong protection for someone who worries a lot about identity theft, such as seniors who can't check their records regularly or consumers whose information has been stolen in a security breach.

A freeze could complicate things if you want your credit file to be accessible for inquiries or new accounts. Establishing utility service, a cellphone plan, or an insurance policy might require access to your credit record. In those situations, you would have to temporarily unfreeze your file by providing the credit bureau with a PIN or other access code by phone or online. 

For a freeze to be effective, you need to freeze your record at all three credit bureaus. Get instructions from TransUnion here. There is a charge of between $5 and $20 each time you freeze or temporarily lift the freeze depending on your state of residence. In many states fees may not apply for seniors or victims of prior identity theft.