How Does a Fraud Alert on My Credit Report Work?

Your credit report is a detailed history of how you handle your debt and credit accounts. It includes information about your history of paying bills on time, your current and prior addresses and employers and any history of foreclosures and bankruptcies. It’s used by many companies to make decisions about extending credit to you for a new loan, credit card or even whether to rent an apartment to you. It contains a lot of important information that needs to be protected, but you also want to ensure that if a company requests your credit report it’s for a legitimate reason. If you haven’t applied for any loans recently and a credit card company is pulling your credit report that could be a sign you’re the target of identity theft – someone is applying for credit in your name.

A credit fraud alert is a notice or “red flag” added to your credit report to notify creditors that your data may have been compromised and they need to contact you before extending new credit in your name. Adding an alert legally obligates companies to take an extra step to confirm your identity by calling you before they process any credit requests in your name. Needless to say, you’ll need to keep your contact information current with the credit agencies since this is how companies will get in touch with you for confirmation.

To set up a fraud alert, just contact one of the three credit agencies (Equifax, Experian or TransUnion) and ask them to place a fraud alert on your credit report. The agency you contact is required to share this information with the other two agencies. It’s convenient and it’s free. An “initial fraud alert” is set for one year (up from 90 days thanks to recent legislation), so you’ll need to put a reminder on your calendar to reset it after a year if you want it to continue. An “extended fraud alert” is also available and lasts for seven years. Because they last so much longer an extended alert, it requires a police report or identity theft report for documentation. There is also a fraud alert for active duty military personnel that lasts one year and allows you to assign someone as a power of attorney (POA) to respond on your behalf.

Are fraud alerts as effective as a credit freeze or credit lock? No, they don’t restrict access to your credit report and rely on companies to follow through with confirmation. But they take minimal effort to set up, have very little downside, and could prevent someone from opening up new credit in your name. Like freezes and locks, a fraud alert doesn’t affect existing credit accounts, only new credit. So you’ll need to continue to monitor existing accounts for fraudulent transactions in other ways such as reviewing your monthly statements.

To remove a fraud alert from your account, you can simply let it expire or request removal at each of the three credit agencies (you can do it via phone, mail, or on the web with proof of your identity.) Unlike setting up a fraud alert, they do not contact each other for removal so you’ll have to make the request three separate times.

For more information about fraud alerts, you can visit each of the credit agency websites; Experian, Equifax, and TransUnion.