Credit Fraud Alert: Do You Need One?

By June 23, 2019Fraud Protection
Business man receiving a fraud alert while at work.

A credit fraud alert can be placed on your credit report to alert lenders that you may be a victim of identity theft or fraud when they are reviewing an application done in your name. It tells them they need to take additional steps to verify that you are who you say you are before they can issue you any credit.

It’s additional security in an increasingly insecure world.

So do you need a credit fraud alert? Does it actually work? Our simple answer is yes; read on to learn why.

Why Do You Need a Credit Fraud Alert?

Why or when do you need a credit fraud alert? To answer those questions, consider the following information from the Bureau of Justice Statistics:

  • In 2016, 10% of people 16 or older experienced identity theft
    • Up from 7% in 2014
  • 14% of households that made $75,000 or more were victims of identity theft
  • 12% of victims in 2016 had to pay out-of-pocket expenses to resolve the matter
    • Total losses for all victims in 2016 amounted for more than $17.5 billion

According to a report from Javelin Strategy and Research, over one million children in 2017 were also victims of this crime. Even worse? About two-thirds of them were less than seven years old.

Identity theft continues to grow year over year. Every time you hear about a data breach or a company being hacked, the data stolen is often sold on the black market via the darknet for identity theft. For those willing to commit this illegal and harmful act, the learning curves are minimal and the rewards are many.

To get a credit fraud alert, all you need to do is call one of the three credit bureaus (TransUnion, Experian, Equifax) and tell them you want one placed on your report. They’ll verify your information with a series of questions, and once they’ve determined that you are indeed you, they’ll place a fraud alert on your report. It’s placed at the top of your credit report and is one of the first things companies or lenders see when viewing your report.

By law, the credit bureau that receives your request must tell the other two bureaus to also place credit fraud alerts on their reports for you as well. This means you don’t have to go through the process of requesting a credit fraud alert more than once.

Fraud alerts tell companies they must take additional steps to verify your identity before they can issue you any credit. The additional steps usually vary, but a common one is calling you at a designated number you’ve provided before they can move forward with an application in your name.

Are There Different Types of Fraud Alerts?

There are two different fraud alerts you can choose from unless you’re in the military (in which case, there are three).

1. Initial Fraud Alert

An initial fraud alert only lasts for one year. It’s easy to place on your report and can be done by calling one of the three credit bureaus. You can request to have a credit fraud alert placed on your report as often as you like, year after year. You just have to remember to make the request.

2. Extended Fraud Alert

Extended fraud alerts last for up to seven years. However, to place an extended fraud alert on your credit reports, you must be able to provide a police report or a Federal Trade Commission Identity Theft Report to the credit bureau you contact. This is obviously one you don’t want to qualify for!

3. Active Duty Alert

For military service members, this credit fraud alert only lasts one year. As with the above options, credit companies must take extra steps to verify your identity before they can open a new account with you. If you are already deployed, you can still get an active duty alert, but the person who signs you up must have power of attorney.

Want to Learn More?

At Ovation Credit, we can answer any questions you have about fraud alerts, as well as review your credit report with you to place you on the path to a stronger credit score. Schedule a free consultation with us today!

Call Now for a FREE Credit Consultation