What Is a Fraud Alert? How to Inform the Credit Bureaus if Your Information is Compromised 

I was the victim of credit card fraud shortly after graduating college. I made a few modest purchases, only to discover that my credit card was also used to pay for gasoline and groceries I didn’t buy. I immediately replaced the card, and luckily, the damage was minimal — but it could have been a lot worse.

At the time, I didn’t know anything about credit bureaus, credit reports, or fraud alerts. A fraud alert is a red flag that you can place on your credit report to warn potential creditors that fraudsters may have compromised your identity.

Fast-forward many years later, and now I’m very familiar with the topic and can help you get up to speed as well. 

You have some options for fraud alerts, depending on your situation. The different types of fraud alerts are meant to provide relief and peace of mind tailored to your situation, whether you are dealing with a one-time scare or need ongoing protection.

Fraud Alert — Initial

If you suspect someone may have swiped your identity, an initial fraud alert is your first line of defense. It’s like putting a temporary “Beware” sign on your credit for a year, giving you time to assess what is happening — without rushing into anything more drastic.

This is the correct alert to raise if you have had a near-miss, such as mislaying your wallet or spying a dodgy charge on your card. It puts creditors on notice to validate anybody applying for credit under your name and thus makes it more difficult for fraudsters to impersonate you.

Fraud Alert — Extended

If you have fallen victim to fraud, an extended fraud alert increases your protection. It remains in effect for seven years, almost like hiring a bodyguard for your credit so no one can mess with it without your explicit consent. 

An extended fraud alert requires a police report explaining the identity theft. This is a long-lasting measure you may need to put in place to ensure your credit stays safe while you work to rebuild a compromised credit profile.

Active Duty Military Alert 

If you are in the military and about to deploy, an active duty military alert makes sense for credit protection while you are away. It lasts for one year and ensures your credit use is monitored while you’re away serving your country.

Setting up this alert provides comforting reassurance. Potential creditors must go the extra mile to verify your identity before they approve new accounts. This added layer of security allows you to focus on your mission without the worry of identity theft looming over you. 

Setting up a fraud alert is simpler than you may think, and it’s a decisive move for your credit protection. It’s a step that empowers you, putting you in charge of your credit security. I’ll guide you through the process so you can confidently take control.

Contact the Credit Bureaus 

First, contact one of the three major bureaus: Equifax, Experian, or TransUnion. Here’s where you can contact each of the bureaus:

Once you make contact, the bureau does all the rest. It notifies the other bureaus and sets up a wide-ranging fraud alert. This ability to coordinate is much more efficient than making calls to several bureaus, which can be a nuisance if you must act quickly to protect your credit.

Provide Necessary Documentation 

After requesting a fraud alert from a credit bureau, you will have to prove your identity. This will most often require you to produce photocopies of your driver’s license, Social Security card, or other forms of identification. Having copies of these handy is a good way to make the process smooth and efficient.

Place an extended fraud alert on your report when you are a victim of identity theft. You must also provide a police report and additional identification. This extra step ensures that the bureau can give your credit the highest level of protection.

Confirm the Alert

Once your fraud alert is in place, the bureau will provide a statement confirming it. It is an acknowledgment that your alert is active and your credit is under lockdown. Keep this confirmation for your records — proof that you’ve taken the right actions to protect yourself. 

Lastly, but definitely not least, are periodic checks of your credit reports. The fraud alert itself is not going to stop everything. By periodically scanning for suspicious activity and promptly reporting anything unusual, you are acting responsibly to stay ahead of potential fraud.

Fraud Alert vs. Credit Freeze

Before diving into this comparison, let’s discuss what a credit freeze is.

A credit freeze, also known as a security freeze, effectively locks down your credit report completely, not allowing anyone — including you — to open new accounts in your name until you lift the freeze.

It’s a powerful tool, especially when protecting against identity theft.

Here is a helpful table to clarify the principal differences between a fraud alert and a credit freeze:

While both are pretty effective, they have different purposes. If you just want to be extra cautious, a fraud alert will work, but a credit freeze is the way to go if you want to protect your credit completely. Whatever course of action you decide on, protecting your credit reports helps safeguard your financial future.

Few things are more frustrating or just plain frightening than to find out your financial information has been compromised. I can understand why you’d worry about the situation until it’s resolved. 

That’s why I advise you to waste no time placing a fraud alert. It can help get you some very needed protection and peace of mind. Let’s look at how a fraud alert affects your credit applications, safeguards against unauthorized credit, and interacts with your credit score.

Effect on Credit Applications 

Placing a fraud alert instructs creditors to take additional steps to verify your identity before approving any new credit in your name.

This may mean contacting you to confirm everything is kosher after receiving a credit application. While this extra verification step helps protect you, it also slows down the credit application process because creditors need to be more cautious.

In my opinion, the slight delay is a small price for the added security. Many find the tradeoff worth making, especially when dealing with the stress of possible identity theft.

Knowing creditors are being extra careful on your behalf can give you additional comfort during an unsettling time.

Protects Against Unauthorized Credit

One of the most significant benefits of a fraud alert is preventing a criminal from opening more accounts in your name.

As discussed above, a fraud alert requires creditor verification before issuing new credit, preventing fraudsters from doing more damage. 

In addition to blocking unauthorized credit, a fraud alert acts as an early warning system. If someone has tried using your identity, you will be alerted right away so that you can respond promptly.

This early detection and response are central to preventing the problem from escalating.

Impact on Your Credit Score

Good news: Fraud alerts don’t affect your credit score. An alert doesn’t ding your credit or create a negative notation on your report. It is strictly a protective measure to keep your credit safe.

So, although you are undoubtedly dealing with high stress from potential identity theft, you won’t have to worry about taking an additional hit to your credit score.

The alert is there to help — not hurt — and won’t worsen matters as you strive to recover your credit standing.

Even though fraud alerts protect you, there will likely be a time when you want to either remove or renew one. Whether wrapping up your fraud alert or extending it for extra peace of mind, here’s how to handle it.

Removing a Fraud Alert 

If you have decided it’s time for the fraud alert to come off, contact the credit bureau where you originally placed the alert. This doesn’t take long, but be prepared to prove your identity, like when you set it up. That helps ensure only you can change your credit protection setup.

When you contact a bureau, you must provide documentation, such as a copy of your driver’s license or other form of identification. Once the credit bureau has verified your identity, it’ll lift the alert and your credit report will return to normal. 

Renewing an Initial Fraud Alert

If your initial fraud alert is going to expire, renewal may be necessary to extend your protection. You must contact the credit bureau before the alert expiry date and request an extension. It’s an elementary step to ensure your credit remains guarded against possible threats.

Extending a Fraud Alert

If you place an extended fraud alert, it will disappear after seven years unless you request its removal. 

The renewal process is simple and can continue to help protect your credit over the long term. In some cases, updated documentation may be required to keep the alert in force. Keeping your papers organized will help in maintaining your credit protection.

As they say, an ounce of prevention is a pound of cure. Foiling credit card fraud isn’t only about reacting when something goes wrong; it’s wise to remain proactive against potential threats. Here are some practical ways to keep your credit safe and sound.

Monitor Your Credit Reports

One of the simplest and most effective ways to prevent credit card fraud is to check your credit reports regularly for any errors or indications of fraudulent activity.

As with many actions taken at an early stage, credit report monitoring can help stop fraud before it really takes off. Frequently reviewing your reports will let you spot inconsistencies, such as accounts you did not open or hard inquiries you did not authorize.

Luckily, once a week, you can request free credit reports from the major credit bureaus: Equifax, Experian, and TransUnion. Checking your credit is an easy habit to get into and could save a lot of financial hassle.

Practice Safe Financial Habits

Taking care of the smaller details helps prevent fraud. For example, credit cards and sensitive documents should be shredded before being disposed of. This will help avoid details from getting into the hands of dumpster divers. Even the thrown-out pieces of a credit card statement or a pre-approved loan offer may be a treasure trove for fraudsters.

Besides shredding documents, you should avoid sharing too much personal information online. The less personal information you release, the safer you’ll be. Don’t share sensitive information such as your Social Security, credit card, and bank account numbers through an unsecured medium. Being prudent about information posted online and on social networking sites is a great way to reduce your exposure to data thieves.

Use Credit Monitoring Services

If you are very security-minded, a credit monitoring service immediately notices any activity in your credit report. You will receive an immediate alert if someone tries to misuse your information. In these instances, a fast response can make all the difference in keeping a dicey situation from escalating.

Many credit monitoring services offer identity theft insurance, which can be helpful if your personal information is stolen. The insurance typically pays for the expenses related to restoring your identity, including legal fees and lost wages, so you have fewer worries. Check out these insurance guarantees carefully, as sometimes there is less coverage than initially meets the eye. 

Identity fraud should concern all of us. A fraud alert is an easy, thoughtful step to securing your credit profile. It lets potential creditors know they should take extra measures before approving new accounts. 

By setting up a fraud alert, you can take back control of your credit profile and ensure your credit accounts stay safe.