The Differences Between a Fraud Alert and Credit Freeze

The increase in identity theft has given birth to a lot of new tools consumers can use to protect their credit. Two of those options are fraud alerts and or credit freezes. t these are two VERY different things. In this article, let us discuss what are the differences between a credit freeze and a fraud alert and how to know which one best suits you.

Fraud Alert - How it Works

A fraud alert is widely used by people who wanted to protect their credit report. With a fraud alert, a creditor should notify you (being the credit report owner) whenever a new account is being opened using your name. In this way, you can confirm if you are really the person opening the new account and not someone else who is just trying to use your identity.

A fraud alert can be put on your credit report simply by calling them and it last for 90 days. After this period, you can either choose to renew the alert or not. You must also keep in mind that there is what we call extended fraud alert. This is only given to people who have become a victim of identity theft. Then the alert would stay on their credit report for seven years.

How do you put your credit report on fraud alert? You can phone the credit bureau and request for your credit report to be put on fraud alert. That simple and easy. Fraud alerts have been used for years now. But some people prefer not to use it since it is not that reliable. Why? Some creditors just ignore the alert, thus putting the credit report owner at risk of identity theft. This is why other people prefer a credit freeze more.

Credit Freeze - How it Works

More people choose a credit freeze over a fraud alert since they think it is more reliable when it comes identity protection.

Credit freeze, also known as credit report lock down, gives an individual total control over his/her credit report. It is done to prevent other people from checking or getting a copy of your credit report. Lenders, insurers, potential employers, landlords, marketing companies are not allowed to tap into your credit report whatever the reason is while it is on freeze. Not even you can access it unless you "unfreeze" it.

If you have plans on opening a new loan or apply for a credit card, you have to send the credit bureau a request to unfreeze your credit report. As long as there is no request to undo it, the "freeze" will remain on your credit report.

With regards to freezing and "unfreezing" your credit report, the only way for it to be granted is by sending a letter of request. Along with the letter, you need to enclose all the requirements needed such as at least two (2) copies of your proof of identification. You also need to pay the freezing fee of $10 to $12 (the freezing fee varies depending on the state of residency) every time you make a request for a credit freeze.

When "unfreezing" the report, there is also another fee of $10 to $12 depending on the credit bureau holding your credit report. It might take a few minutes up to 3 days. There are instances that it takes a week.

Freezing a credit report is considered a more reliable choice than fraud alert since it totally does not allow any person, not even you, to access your credit report. When a creditor tries to gain access of your credit report, he/she is only given a message that your report is on freeze. Think of the protection you will get from freezing your credit report and you will definitely agree with me that it is all worth it.