What is a credit freeze, a consumer-initiated fraud alert, and what is the difference between them?

A credit freeze and a fraud alert are tools that consumers can use to protect themselves and their credit history from possible fraud.

What is a credit freeze vs. a fraud alert?

Sometimes called a security freeze, it is used when there is a reason to suspect that your credit information is not accurate. It enables you to place a block on your credit reports at all three of the major Consumer Reporting Agencies. The block prevents your credit history from being released to potential new creditors. A credit freeze locks down your credit and prevents any new creditor from seeing your credit report. No new credit can be approved and established in your name without your prior approval. A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity before extending a credit offer to you. For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request.

Benefits of a credit freeze

  • A credit freeze ensures that potential creditors extend new credit to you only after they verify your identity by contacting you.
  • A credit freeze does not affect your credit score.
  • A credit freeze does not prevent you from receiving pre-screened credit offers from lenders who want to solicit your business.
  • A credit freeze does not block you from viewing your credit reports at the three major CRAs, but it does block a new creditor from obtaining your credit report and credit score.
  • You can remove a credit freeze to process new credit applications.

Benefits of a fraud alert

Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card, and insurance statements for fraudulent transactions.

A fraud alert allows you to get notifications on any transactions in your credit file for a certain period of this.

Types of fraud alerts

Initial Alert: If you’re concerned about identity theft, but haven’t yet become a victim, this fraud alert will protect your credit from unverified access for at least 90 days. You may want to place a fraud alert on your file if your wallet, Social Security card, or other personal, financial or account information are lost or stolen.

Extended Alert: For victims of identity theft, an extended fraud alert will protect your credit for seven years.

Active Duty Military Alert: For those in the military who want to protect their credit while deployed, this fraud alert lasts for one year.