Identity theft is a serious problem, and it's important to take steps to protect yourself.
The Federal Trade Commission (FTC) reports that in 2022, online fraud, including identity theft, caused Americans an estimated $8.8 billion in losses, with each victim experiencing a median loss of $650. However, some private estimates indicate that the total cost of online fraud is considerably higher.
Fraud alerts and security freezes are two ways to protect your credit history. They both make it more difficult for identity thieves or others to open new lines of credit in your name. But what's the difference between the two, and which one is right for you?
What is a Fraud Alert?
A fraud alert is a flag that you can place on your credit report to warn lenders that you may be a victim of identity theft. It encourages lenders to take extra steps to verify your identity before opening new accounts in your name or making changes to your existing accounts.
It is a security measure that you can place on your credit reports with the major credit bureaus: Equifax, Experian, and TransUnion. Fraud alerts last one year and are free to place and renew. You are also entitled to a free credit report from each major credit bureau.
What is Card Freeze?
A credit freeze safeguards your credit report from criminals by acting as a protective barrier, akin to setting a password on your credit report. If you freeze your credit report, businesses become unable to access it, thereby preventing criminals from opening new accounts in your name.
You can request a credit freeze for any reason, and there is no requirement for you to be a fraud victim. Unlike a fraud alert, a credit freeze doesn’t expire and remains in effect indefinitely.
Which one should you consider?
How much control you want over your credit information will determine whether you should place a fraud alert, a credit freeze, or both on your credit reports.
Fraud alerts warn lenders of possible identity theft, while a security freeze stops them from accessing your credit report without your permission, providing stronger protection.
Many people opt to begin with a fraud alert because it is easier to set up. If they later determine that they require additional protection, they can implement a credit freeze. The most suitable choice for you relies on your individual needs and preferences. You can also consult a financial advisor or identity theft expert for personalized advice.
Conclusion
Fraud alerts and credit freezes are two ways to protect your credit. You can have one or both. A credit freeze is the best protection against new fraudulent accounts being opened in your name. It prevents lenders from seeing your credit report unless you give them permission.
A fraud alert warns lenders that there may be a risk of fraud on your account. It encourages them to verify your identity before issuing new credit. If you are worried about identity theft or have been a victim of fraud, you may want to consider placing both a fraud alert and a credit freeze on your credit report.
Even if you have a fraud alert or credit freeze in place, you should still be careful about giving out your personal information to anyone
