The three credit reporting agencies offer a credit freeze and a fraud alert as ways to protect your credit. In order to know which form of protection is best for you, it is important to know the differences between them.
Identification
A fraud alert is a note tagged on to your credit report that asks any potential creditor to contact you before opening any new accounts. A credit freeze is the locking out of your credit information to any potential creditor.
Types
A standard fraud alert remains on your credit report for 90 days, while an extended fraud alert will remain on your report for seven years. A 90-day fraud alert can be renewed to keep it going. According to the financial experts at Kiplinger.com, an extended fraud alert is only granted when a police report or some other form of proof can be provided that the consumer is a victim of identity theft. A credit freeze remains on an account until the consumer lifts it.
Costs
A fraud alert is free to any consumer. Placing a credit freeze on an account is initially free, if you are the victim of identity theft. If you are not a victim of identity theft, you will need to pay a fee. The fees vary by state. Lifting a credit freeze also will incur a fee, which varies by state. If you have a freeze put on your account due to identity theft and you later have it lifted in order to add credit to your account, it may cost you to reapply the freeze, depending on the state in which you live.
Considerations
Creditors can choose to ignore a fraud alert and authorize new credit under your name without contacting you. With a credit freeze, no one, not even you, can get new credit under your name. If you want to add a credit account, you first will need to temporarily lift the freeze.
Fun Fact
According to Kiplinger.com, a credit freeze used to be a state law, but as of November 1, 2007, it became part of a federal law that regulates much of the credit reporting industry.
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