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Understanding Fraud Alerts and Credit Freezes: Protecting Your Credit
In the world of credit, you may have come across the terms “fraud alert” and “credit freeze.” Both are essential tools to protect yourself from fraud, but they function differently. At O1ne Mortgage, we understand the importance of safeguarding your credit, and we’re here to help you navigate these options. If you have any mortgage service needs, don’t hesitate to call us at 213-732-3074.
What Is a Fraud Alert?
A fraud alert is a notice placed on your credit report, asking creditors to verify your identity before approving any credit applications. This measure is particularly useful if you suspect someone is using your information without your permission. When you place a fraud alert with one of the three major credit bureaus (Experian, TransUnion, or Equifax), it automatically extends to the other two bureaus.
Types of Fraud Alerts
There are three types of fraud alerts you can request:
- Temporary Fraud Alert: Also known as an initial fraud alert, this type lasts for one year unless renewed. It’s ideal for anyone seeking extra protection from fraudsters.
- Active-Duty Fraud Alert: This alert is for active-duty service members and lasts for one year. It can be renewed as long as needed during deployment.
- Extended Fraud Victim Alert: Lasting seven years, this alert is for victims of credit fraud or identity theft. You can obtain it by submitting a report filed with a law enforcement agency.
How to Set Up a Fraud Alert
Setting up a fraud alert is straightforward. Visit the Experian Fraud Alert Center, choose the type of alert you want, and follow the instructions for uploading or mailing in copies of your ID, proof of address, and any other required documentation.
When to Lift a Fraud Alert
Unlike a credit freeze, a fraud alert shouldn’t hinder you from securing new credit. However, if you decide to remove it, ensure you’re no longer at immediate risk of fraud or identity theft. To lift a fraud alert, contact each credit bureau individually. Alternatively, you can let it expire naturally after one year for a temporary or active-duty fraud alert, and after seven years for an extended fraud alert.
What Is a Credit Freeze?
A credit freeze, or security freeze, restricts creditors from accessing your credit report to open new accounts in your name. This measure is designed to protect consumers from fraud. While a credit freeze limits access to your credit report, it doesn’t prevent all entities from viewing it. Those who can still access your report include:
- Current lenders and card issuers managing accounts
- Landlords and rental agencies reviewing tenant applications
- Debt collectors pursuing payments
- Credit card issuers prescreening you for offers
- Prospective employers with your permission for a background check
- Child support agencies
- Government agencies executing court orders or warrants
How to Freeze Your Credit
To freeze your credit, you must contact each of the three major credit bureaus. Here are the steps for freezing your credit online with Experian:
- Sign up for a free Experian account if you don’t already have one.
- Provide your name, date of birth, two-year address history, and Social Security number.
- Set up a security freeze to limit access to your Experian credit report. This freeze takes effect immediately and can be removed whenever you want.
If you request a security freeze online or by phone, the credit bureau must activate it within one business day. For mail requests, activation takes three business days.
When to Unfreeze Your Credit
You can temporarily thaw or permanently unfreeze your credit report at any time. Experian allows you to do this online, by phone, or by email. A temporary thaw involves setting a start and end date for unfreezing your report, while permanent removal means the freeze is no longer in effect unless you reactivate it.
If you plan to apply for new credit, such as a credit card, mortgage, or auto loan, you should thaw or unfreeze your credit report. Otherwise, potential creditors won’t be able to evaluate your application.
Should You Use a Fraud Alert or a Credit Freeze?
Choosing between a fraud alert and a credit freeze depends on your situation. Here’s a guide to help you decide:
- If you’re a victim of credit fraud or identity theft, consider how often you’ll need access to your credit reports. An extended fraud alert requires lenders to verify your identity, while a credit freeze adds more restrictions.
- If you plan to apply for several types of new credit in the near future, an extended fraud alert might be simpler than managing multiple credit freezes and thaws.
- If you don’t plan to apply for new credit soon, a credit freeze might be the best choice. However, you may need to thaw your credit reports for non-lenders like cellphone and internet service providers.
- If you’re concerned that your personal information has been compromised but haven’t been a victim of crime, consider setting up a temporary fraud alert. You can cancel or renew it each year as needed.
Fraud Alert vs. Credit Freeze
| Fraud Alert | Credit Freeze |
|---|---|
| Creditors are asked to verify your identity before opening credit in your name | Access to credit reports is limited so creditors cannot open new accounts in your name unless you thaw or unfreeze your report |
| Best for someone who may need to apply for new credit in the near future | Best for someone who doesn’t expect to apply for new credit in the near future |
| Free | Free |
| One year for temporary or active-duty fraud alert; seven years for extended fraud victim alert | Indefinite |
| Can be renewed | Can be renewed |
| Set up online, by phone, or by mail; the other credit bureaus will be notified when a fraud alert is set up at one bureau | Set up online, by phone, or by mail; all three major credit bureaus must be notified separately |
The Bottom Line
Fraud alerts and credit freezes are valuable tools to combat credit fraud and identity theft. Fraud alerts are typically more temporary and allow access to your credit file with added identity verification, while credit freezes have more restrictions and can last indefinitely. Regularly reviewing your credit report from Experian for free can help you spot any suspicious activity.
At O1ne Mortgage, we prioritize your financial security. If you have any questions or need assistance with your mortgage, call us at 213-732-3074. We’re here to help you every step of the way.
Learn More About Freezing and Unfreezing Your Credit
How to Check if My Credit Report Is Frozen
A frozen credit report can make applying for new credit accounts difficult. Here’s how you can check and manage credit report freezes.
Does Freezing Your Credit File Affect Other Accounts?
Freezing your credit file will not affect your existing credit accounts. Find out how a security freeze works and when it’s a good idea.
Can I Apply for Credit if My Credit Report Is Frozen?
Credit freezes can stop thieves from taking out debt in your name, but they also block legitimate credit checks. Here’s what to know.
Credit Freeze and Credit Lock: What’s The Difference?
Credit freezes and locks restrict credit report access and prevent new credit applications. Learn more about each option.
For any mortgage service needs, remember to call O1ne Mortgage at 213-732-3074. We’re committed to providing you with the best service and ensuring your financial security.
