Fraud Alert vs Credit Freeze: Which One Should I Use?

Both fraud alerts and credit freezes are free of charge, but there are some differences between the two you should be aware of if you’re deciding on placing one over the other. Both fraud alerts and credit freezes are meant to protect you from identity theft and fraud, however, fraud alerts add an extra layer of verification and only last a year, whereas credit freezes prevent new credit from being opened and don’t expire.

Continue reading to learn more about fraud alerts and credit freezes to see which is the best option for you. 

What is a fraud alert?

A fraud alert is a free notice that can be added to your credit report. After placing a fraud alert, you are required to verify your identity before you can take out a loan under your name or open a new line of credit. 

Types of fraud alerts

There are three types of fraud alerts: active duty alert, initial fraud alert and extended fraud alert. 

• Active duty alert: An active duty alert is for individuals on active military duty. This type of fraud alert lasts for one year and can be removed at any time.
• Initial fraud alert: An initial fraud alert, also called a temporary fraud alert, lasts for one year and expires after the year has passed. You can place this type of fraud alert at any time and renew it as many times as you’d like. 
• Extended fraud alert: An extended fraud alert lasts for seven years. This type of fraud alert was created for individuals who have been victims of identity theft or other types of fraud. 

When to place a fraud alert

The following are a few scenarios where you should consider placing a fraud alert on your credit report:

• If you believe you’re a victim of fraud or are going to become a victim
• If you suspect your identity has been stolen 
• If you want to keep your identity safe

You don’t necessarily have to be at risk or a victim of fraud or identity theft to place a fraud alert. You can also place a fraud alert if you want an extra layer of protection to prevent others from being able to take out a loan or new credit line under your name. If this is the case, you’ll need to place an initial fraud alert and renew it every year for as long as you want it to remain active. 

How to place a fraud alert

Here’s how to place an active duty, initial or extended fraud alert.

• Active duty alert: To place an active duty alert you’ll need to contact one of the three major credit bureaus: Experian, TransUnion or Equifax. You only need to contact one bureau. The bureau you contact will notify the other two bureaus that you want to place a fraud alert on your credit report. 
• Initial fraud alert: Placing an initial fraud alert is similar to placing an active duty alert. All you need to do is contact one of the three credit bureaus: Experian, TransUnion or Equifax.
• Extended fraud alert: Before placing an extended fraud alert, you have to report your identity theft to law enforcement or the Federal Trade Commission (FTC). You’ll need to have a copy of the report you filed to place this type of alert on your credit report. Once you have a copy of your report, you can contact one of the credit bureaus: Experian, TransUnion or Equifax.

What is a credit freeze?

A credit freeze, sometimes referred to as a security freeze, prevents creditors from accessing your credit report. By preventing access, you’re preventing them from approving new loans or credit lines under your name. This helps protect you from becoming a victim of identity theft or other types of fraud. You can lift or “thaw” the freeze at any time. Unlike a fraud alert, a credit freeze does not expire, meaning you have to remove it by contacting each of the three credit bureaus. 

When to place a credit freeze

The following are a few scenarios where you should consider placing a credit freeze:

• You’re believed to be a victim of fraud
• You suspect your identity was stolen
• You don’t plan on taking out loans or opening new lines of credit anytime soon
• You want to protect your child from child identity theft

How to place a credit freeze

To place a credit freeze on your credit report you’ll need to contact each of the three credit bureaus separately: Experian, TransUnion and Equifax. Unlike a fraud alert, freezing your credit at one bureau will not freeze your credit with the other two bureaus because creditors use different credit scoring models and it’s never clear which model a creditor will use. 

If you want to place a security freeze on your child’s credit report, they need to be under the age of 16. You’ll also need to add them as an authorized user on your credit card. This is because you cannot place a security freeze on a child’s credit report if they don’t have one. Then, you’ll need to contact each credit bureau to place a minor security freeze: Experian, TransUnion and Equifax. You’ll be asked to provide proof of your identity, your child’s identity and proof that you’re their parent or legal guardian.

Should you place a fraud alert or credit freeze?

If you want more security and aren’t planning on taking out loans or opening new lines of credit anytime soon, a credit freeze may be the best option for you. With a credit freeze, you won’t have to worry about renewing it every year. However, if you only want to protect your identity for a year or less, and are planning to have your credit checked often, placing a fraud alert may be a better option since you won’t have to worry about freezing and unfreezing your credit. 

Can you place both a fraud alert and a credit freeze?

Yes, you can place a fraud alert and credit freeze on your credit report at the same time. Victims of identity theft and fraud tend to place both a fraud alert and credit freeze as an extra security precaution, in case one fails.

The bottom line

Both a fraud alert and credit freeze can help you keep your identity safe, but there are some factors you should consider before placing one over the other. If you were recently a victim of identity theft or fraud, it may be best for you to place both a fraud alert and credit freeze on your credit report.