|Andy Jolls is the CEO and founder of VideoCreditScore.com. With topics that range from the Credit Score 101 to tips on Identity Theft, VideoCreditScore.com provides a simple way to learn about a complex subject. An alternative to reading volumes of pages in books or on the web, consumers can simply access short segment videos whenever and wherever they want.
First, what is a Fraud Alert?
An alert places a statement on your credit report so that if a fraudster
attempts to obtain credit in your name, the creditor, in checking your credit,
will encounter a statement that says something to this effect: “I may be a
victim of fraud. Call me at my phone number 312-555-7890 before extending
credit.” By calling you, the creditor ensures more security.
There are two types of Fraud Alerts
The first and much more common is a 90-day fraud alert. This is for someone
who “suspects” they have been an id theft victim, but doesn’t know for sure.
So, I setup a 90-day alert a few weeks ago, and
here’s how it impacted me. When I went to switch cell phone carriers, instead of
the normal online credit check they usually do--yes, your credit score is
checked when you apply for a cell phone plan (did you know this?)--they tried to call my contact number to
verify it was me. So my old cell phone rang, and then I was able to verify over
the phone that, yes, it was me trying to order a new plan. My visit to the cell
store was longer, but it was a lot safer.
As I was just suspicious that I was a victim of ID theft, just a few weeks
earlier, I got the 90-day alert.
To set this up, call any of the 3 bureaus. Equifax’s number is 1-800-685-1111--select option 4. Or go to
www.equifax.com. Again, you can call any of the
bureaus, I just liked the Equifax automated system.
The second type is a 7-year alert and this for people who MUST prove to the
Credit Bureaus that they were victims of ID theft by providing documentation
from their credit card companies or other financial institutions. A good idea,
if you’ve been a victim.
Finally, there’s something called a Fraud Freeze or Credit Freeze, which is
available by law or on a volunteer basis by the bureaus in all 50 states and
So what is it?
A security freeze means that your credit file cannot be shared with potential
creditors or insurance companies; it can help prevent identity theft since most
businesses will not open credit accounts without checking a consumer’s credit
history first; Once your account is frozen, credit cannot be granted until you
unfreeze it. So, remember my cell phone story a moment ago? If I had a fraud
freeze in place, I would not receive a call and credit would have simply been
denied. So, it’s more protective than a Fraud Alert.
ID theft victims can list for free in most states but ‘non-victim’ consumers
will pay $10/bureau to set it up and $10 each time they need to unfreeze it. In
most cases, you have to send your requests by certified mail. Click on the link
under resources to find out more specifics with your state.
If you are past the credit needing age, and not likely to need credit for
anything, you may want to do a credit freeze. Okay, this isn’t right for most of
us, but it might be for your parents, or your aunt or uncle. The elderly are
common targets of ID theft as they often have great credit scores and aren’t
checking accounts as frequently.
Fraud alerts and fraud freezes are not 100 percent fail-safe, as some
creditors can and will issue credit without pulling a credit report. But they
are effective as most financial institutions use credit checking to protect
themselves. And that, in the end, protects you better.
Okay let’s recap. There are three types of protective measures: the 90-day
alert, the 7-year alert, and the Fraud Freeze. The Fraud Alerts are Free and
provide an extra layer of security. The 7-yr fraud alert will only be placed
with Proof that you were a victim, whereas the 90-day alert can be placed by
anyone merely suspicious of fraud. The Fraud Freeze is more protective and costs
$10 to setup and $10 to unfreeze for each bureau. A good idea if you don’t need
a loan, credit card, or new cell phone plan in the near future.