What is a Fraud Alert?

The Federal Trade Commission reports that as many as 9 million Americans are the victims of identity theft every year. That number is only expected to rise as hacking methods get more sophisticated. To help combat identity theft, one thing you can do is to place a fraud alert on your account. 

A fraud alert is a notice that you can have placed on your credit report that alerts credit card companies or other types of lenders that you may be a victim of identity theft while they are screening your application. It makes it increasingly more difficult for identity thieves to open up a new line of credit in your name. 

But how is it done, and when should you place it on your credit report? We discuss these things (and more) below. 

What happens when you have a fraud alert placed on your credit report?

First and foremost, a fraud alert notifies the three credit bureaus (Equifax, Experian, and TransUnion) that you may be a victim of identity theft. It shows that you’re concerned that someone may be trying to open a new account under your name instead of their own. Your account essentially is flagged if and when a creditor looks at it. He or she then knows to drastically slow down the approval process.

When a creditor sees that you have a fraud alert on your file, that creditor then must legally take additional actions to verify that you are actually you. This is done by asking you a variety of personal questions that a basic hacker and identity thief wouldn’t know. When the questions aren’t answered correctly, the application is denied.

When is a fraud alert needed?

A fraud alert needed in many different situations. For starters, it’s a great option if you’ve lost or misplaced your credit cards, personal identification, or cell phone because all of these can be used against you. Each can be used to triangulate other aspects of your personal information to close the gap between what is known and what is not known. So, even if you are able to recover your lost items, you don’t know what may have happened in your absence. It’s best to cover all of your bases in case any information was taken for later use. 

Another good time to place a fraud alert on your credit reports is when you see suspicious activity on your credit card and bank statements. Still, contact the agencies about the unusual charges and ask that they be removed, of course. A fraud alert will not make charges go away! You may be thinking that a person who has your credit card information may not have any intention of opening up a new card, but it’s often the next step for many identity thieves. 

You should also place an alert whenever a large corporation that you routinely do business with has a data breach. Yes, you may be only one of the thousands (or millions), but the risk is still there. Your data will likely end up somewhere on the darknet, bought and sold alongside countless others for a small sum. It may not be you, but many people in that breach are going to get hit. A fraud alert will help protect you. 

Lastly, you should place a fraud alert on your credit reports when you know you have been a victim of identity theft. People who are victims of identity theft once are 20% more likely to be victims again, whether by the same thief or someone else.

How long does it take for a fraud alert to go into effect?

Fraud alerts typically only take about 24 hours to show up on your credit report. If you’re concerned that you’re going to soon be a victim, consider alternate methods of security (which are discussed below) such as a credit freeze.

How do you place a fraud alert on all of your credit reports?

It’s actually only necessary to place a fraud alert on one of your credit reports. Once that credit bureau receives the fraud alert request, it must then notify the other two bureaus to do the same. You don’t have to worry about separately asking each bureau to place a fraud alert on your credit report. Current law states that they must pass the message on. 

You can place a fraud alert on your credit report either online or over the phone. If doing it online, you’ll need to first create an account with the credit bureau if you don’t already have one. If you already have an account, placing a fraud alert on your credit report is much faster. 

If you don’t already have an account with one of the credit bureaus, it may be easier to simply call and make your request over the phone. The numbers for each credit bureau are:

  • Experian — 1-888-397-3742
  • Equifax — 1-800-525-6285
  • TransUnion — 1-800-680-7289

Depending on what type of fraud alert you request, you may be required to enter in specific information related to past incidences.  

Are there different types of fraud alert options?

Yes, you may have as many as three options.

Temporary Alerts

A temporary fraud alert is good for one year and ensures that creditors must take additional steps to verify your identity, such as call you at home. You do not have to be a victim to request a temporary alert. 

7-Year Fraud Alert

Also known as an extended fraud alert, a 7-year fraud alert is more difficult to get. You must prove you have been a victim of identity theft and are in need of an extended alert. To prove you have been a victim you will need to provide either a police report or an FTC identity theft report.

Active Duty Report 

A military report is great if you are going to be serving abroad for an extended period of time and will not be able to easily manage your accounts. It only lasts for one year, but, if needed, you can have someone with power of attorney request to have additional fraud alerts placed on your credit reports when needed. Just make sure you designate them before you’re deployed!

Do fraud alerts hurt your credit score?

No, fraud alerts do not negatively impact your credit score in any way, but they do delay credit applications. To some extent, then, they could hold your credit score back if you applied for a large line of credit, but in and of themselves they don’t drop your score any amount. 

Can you get a fraud alert removed once it’s been requested?

Yes, you can. All you have to do is make a phone call to one of the credit bureaus and answer some verification questions. It can also be done online if you created an account with the credit bureau. 

Is it possible to have someone manage a fraud alert for you?

Yes, but that person must have power of attorney. This representative can also update your contact information and delete any fraud alerts if necessary. This is a great option if you are in the military, or are unable to manage your personal welfare and finances.

Other ways to protect yourself from identity theft:

Placing a fraud alert on your credit report is an effective tool to combat identity theft, but it’s not the only thing you can do. Here are other strategies you can take to protect yourself against this ever-increasing crime:

  • Take the time to review your credit reports once a year. You can view each for free through AnnualCreditReport.com. Review each item to make sure it’s legitimate.
  • Never store any important information on your computers, such as passwords or credit card numbers.
  • Sign up for a VPN, which protects your identity while you are surfing the internet. 
  • Never use the same password for multiple websites.
  • Have up-to-date virus protection and firewalls installed on your computer.
  • Always check your physical mail every day. If you’re going to be away for a few days, place a hold on your mail. This is easily done online through the USPS. 
  • Review all of your bank and credit card statements to make sure no one is using your accounts.
  • Shred or destroy sensitive documents that are no longer needed.
  • Always use security features that come preinstalled on your phone. These include such things as:
    • Two-step authentication
    • Six-digit passcodes
    • USB restricted access
    • Turn on automatic updates
    • Find my device
    • Safe browsing
  • Never give away your personal information to a website that is not secure. 
  • Never give away personal information over the phone.
  • Subscribe to an identity protection service.
  • Request a credit freeze — a new law allows everyone access to a free credit freeze. With this service, creditors can’t access your credit report at all. 

The Bottom Line

Have you ever asked yourself whether or not you should go to the doctor when you were sick? You ended up going to the doctor 9 out of 10 times, didn’t you? 

If you think that maybe you should put a fraud alert on your credit report, chances are you should. There’s really no reason not to. It doesn’t cost anything and it doesn’t hurt your credit score in any way. All in all, it’s better to be safe than sorry.