You hear about yet another data breach and fear your credit card
information may be in the hands of thieves. Or you misplace your
card. Last time, it turned up in the washer and so far no one's
hacked your financial info. But you worry it's just a matter of
What to do? It may be time to consider a
Think of a fraud alert as a yellow flag on your credit file. It
notifies lenders and others that they should take special
precautions to verify your identity before extending credit, says
Julie Springer, vice president at credit reporting agency
Other tools include a
. Unlike a credit freeze, a fraud alert is free. Rather than
blocking lenders from seeing your credit report altogether, it
requires they go through extra steps to make sure you are who you
say you are when you apply for credit.
All three credit reporting bureaus -- Equifax, Experian and
TransUnion -- offer fraud alerts. Understanding what's involved
will help you decide if they're the right tool for you.
More obstacles for fraudsters (and you
Keep in mind that in addition to thwarting or at least slowing
people with bad intentions, a fraud alert could slow
down when you want credit. Be prepared to jump through extra hoops,
the credit bureaus say.
When you apply for new credit, the lender will pull your credit
report. If you've got a fraud alert in place, the credit bureau
requires the lender to take extra steps to verify your identity,
says Experian spokeswoman Kelsey Stagner. That may mean the
creditor needs to request additional authentication documentation,
call a phone number you have provided in the alert, or take other
actions to ensure it's really you -- not an identity thief -- who
is applying, Stagner says.
"You've alerted them," says Maxine Sweet, Experian's president
of public education. "They don't want to open a fraudulent
account either because their books will take a hit on losses."
The creditor may ask you "out of wallet" questions that a
stranger couldn't answer, such as, "What was your address in 2009?"
and "What is your current mortgage payment?" TransUnion's Springer
says. The creditor would know the answer based on information in
your credit report, she says. Presumably, a fraudster would
Assuming all of the information provided to the credit bureau
matches your record, the bureau will give the lender your credit
report. But it will also notify the lender that a fraud alert is on
file so that it can then take additional action if necessary.
If you're applying for new credit in person, you may be asked to
provide additional forms of ID or a bill with your name and
address. For applications made online, you will need to be at the
phone number you provided so that the credit issuer can confirm
Even if you're applying in person, some creditors may call the
phone number you gave to prove you are who you say you are. For
example, if you have an extended fraud alert, Capital One
representatives will call you to confirm your identity no matter
how the application for credit is submitted, spokeswoman Amanda
The three credit reporting agencies also have other systems to
help credit issuers verify your identity if you have a fraud alert
on your file. If the credit issuer cannot verify your identity, you
may be denied credit -- it's up to the credit issuer to make that
decision, TransUnion's Springer says.
3 types of fraud alerts
There are three kinds of fraud alerts you can request, depending on
1. Initial fraud alert.
If you're concerned your financial information has been or may be
compromised, but don't know for sure, an initial fraud alert is
probably best for you. It does not require you to prove that a
breach or theft has happened or file a police report.
"A lot of people lose wallets, checkbooks, different items
that make them worried they may be a victim," Experian's Sweet
says. "Most of the time when someone steals your wallet they're
not trying to steal your identity. But you could be at risk."
The initial fraud alert lasts for 90 days and can be renewed.
File such an alert with one of the three credit bureaus, and that
bureau will notify the other two. Initial fraud alerts will be
placed on those files, too, TransUnion's Springer says. The alert
entitles you to one free credit report from each
"That puts the alert out and it gives you time to look at your
credit reports and determine if you really are a victim of fraud
and need to file a police report," Sweet says.
2. Extended fraud alert.
Your next step up is an extended fraud alert, Springer says. An
extended fraud alert, which is also free, lasts seven years. It
entitles you to two free credit reports from all three credit
reporting agencies in the first year. (Anyone can get one free
report from each of the three bureaus in any given year by going
To get this longer-term protection, you'll need proof of the
threat such as a copy of a police report or identity theft
report, according to the credit reporting agencies. "This time
you're saying, 'I'm not just suspecting. I believe I really am a
victim,'" Sweet says.
Meredith Griffanti, senior director of public relations at
Equifax, notes: "Many people request extended fraud alerts in
hindsight after falling victim to identity theft."
3. Active duty military alert.
If you're in the military and deployed, all three credit
reporting companies offer protection via an active duty military
alert. As the name implies, this helps protect your credit and
minimizes your risk of fraud and ID theft while you're deployed.
It is similar to an initial fraud alert, except that it lasts one
year and your name is removed from all preapproved or firm offers
of credit or insurance for two years.
Lifting a fraud alert
Unlike a security freeze, which you can lift by going online and
using a PIN, a fraud alert takes some time to remove. At Equifax
and Experian, you need to file a written request to remove a fraud
"You can't do that at the last minute," Experian's Sweet says.
"You can't say 'I'm Maxine Sweet and I have a fraud alert. Can you
take it off?' You have to request it to us [in writing] with proof
of identity. It takes two days to a week."
TransUnion's process is quicker. It has an online fraud alert
page and a victims' assistance phone number for removing a fraud
You may need more protection
Robert Siciliano, CEO of IDTheftSecurity.com, thinks fraud alerts
don't do enough. Initial fraud alerts offer only temporary
protection, he points out. But many people get one and think
they're still protected when it expires after 90 days. Plus,
Siciliano says, a fraud alert -- even an extended alert -- does not
offer enough protection.
Fraud alerts do not prevent third parties from looking at your
credit file, Equifax's Griffanti adds. Unlike with a security
freeze, lenders still have the ability to extend credit to anyone
"Over a billion records have been breached in the past decade,"
Siciliano says. "If you're an American, your Social [Security
number] likely has been breached two or three times already.
Consider yourself breached. Now is the time to get a credit freeze.
Don't wait until your identity is stolen."
Although Siciliano and his family have not been ID theft
victims, they have had security freezes since February 2008 when
the service first became available.
Your decision depends on your finances and habits. "For example,
if you travel extensively and are always using charge cards,
pulling out your passport, etc., you are putting yourself in a
situation where you are more likely to have your ID stolen --
allowing someone to possibly take credit out in your name," says
TransUnion's Springer. "A freeze would be a good remedy to this
lifestyle, versus someone who lives in a small town and makes local
merchant purchases only. Everyone's situation is different."
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