Financial Blog - Big Picture Loans

Fraud Alerts: The Ultimate Guide

Written by Sample HubSpot User | Jul 21, 2021 12:00:00 PM

Have you lost your credit cards? Concerned that someone might have stolen your bank account information? Worried, your Social Security number was exposed in a recent data breach at your favorite retailer?

What do you do?

You need to act fast! You do not want to become another statistic as a victim of identity theft.
In 2019 the Identity Theft Resource Center reported 1,473 data breaches exposing more than 869 million records.

Maybe it's time to place a fraud alert on your accounts.

What is a Fraud Alert?

Fraud alerts were created to help notify you when your personally identifiable information may have been shared fraudulently. A fraud alert is a statement on your credit report to alert lenders that additional steps are required to verify your identity before processing credit applications in your name. Many lenders might reach out to you by text or phone for this verification. Placing a fraud alert is a free service offered by the three national credit bureaus that make it harder for someone to open accounts in your name.

A fraud alert aims to notify you if an identity thief attempts to open fraudulent credit accounts or loans in your name.

A fraud alert only needs to be placed with one of the three national credit bureaus. They are required to communicate the information to the other two.

A fraud alert will not protect any existing credit accounts. It is there to make it difficult for fraudsters to open new bogus accounts in your name.

What is the Purpose of a Fraud Alert?

The purpose of a fraud alert is to make it more difficult for criminals to open credit accounts and obtain loans by adding a security layer to the application process. When a lender runs a credit check and requires access at one of the three national credit bureaus, the fraud alert will pause the credit check and inform the lender to confirm your identity.

Types of Fraud Alerts

There are three types of fraud alerts:

  1. Initial Fraud Alert – This is for those that are concerned about or suspect you may be a victim of identity theft or fraud. The length of an initial fraud alert is one year.
  2. Extended Fraud Alert – This is for those who have been a victim of identity theft or fraud. The length of an extended fraud alert is seven years.
  3. Active Duty Military Alert – This is for active members of the military who want to protect their identity while deployed. The length of an active duty military alert is one year.

How to Place a Fraud Alert

Placing a fraud alert is, thankfully, a rather simple process, plus it's free to do. All that needs to be done to set a fraud alert is to contact one of the three national credit bureaus, and it will notify the other two bureaus. You can contact one of them via their website.

How to Remove a Fraud Alert

Fraud alerts placed on your accounts, of any type, can be updated or removed through the same process.

There are several options to remove the fraud alert from your accounts. 

  1. One option is to let the alert expire at the end of its term. This option requires no action on your part. The fraud alert, if not renewed, will automatically be removed.
  2. The second option is to remove the alert before it expires. You can have the alert removed by contacting the credit bureaus during the term of the alert. Removing the fraud alert from your account will not affect your credit score.
  3. To remove a previously placed fraud alert, you will need to contact all three major credit bureaus individually. They will not contact each other to remove the fraud alert from your accounts.

Fraud Alert FAQ's

Q. What does it cost to place a fraud alert with the national credit bureaus?

A. There is no cost to set a fraud alert on your credit report.

Q. Is this service safe and secure?

A. Yes, this service is safe and secure. The main priority of a fraud alert is to protect your accounts and personal information.

Q. Will my credit be hurt by placing a fraud alert?

A. Your credit will not be affected by placing a fraud alert on your credit report.

Q. Can I still get a loan or credit card if there is a fraud alert on my credit report?

A. By law, a fraud alert cannot prevent you from being approved for a loan or credit. There will most likely be a delay with processing your credit applications until your identity is verified. Of course, you still have to qualify for a loan based on your creditworthiness.

Q. Does a fraud alert also go into effect for my individual credit accounts?

A. No, a fraud alert is only in place on your credit report.

Q. Do fraud alerts stop me from buying things with my credit card?

A. No, fraud alerts do not affect purchases made with a credit card because there is no credit check during credit card purchase transactions.

Fraud Alert Bottom Line

A fraud alert can be a proactive way to guard against identity theft and fraud. It is an easy first line of defense against the massive data breaches that seem to happen too often these days. Remember, a fraud alert will not protect any existing credit accounts but can make it difficult for criminals to open new fraudulent accounts in your name.