Both restrict access to credit history.
Maybe you’ve been a victim of credit fraud. Or maybe, considering the number of data breaches reported lately by retailers, you worry it’s only a matter of time.
Two tools ― the credit freeze and the fraud alert ― restrict access to your credit history, offering protection against those who’d do you wrong.
“There’s no one-size-fits-all protection,” says STCU Fraud Prevention Manager Jim Fuher. “It really depends on your individual situation.”
Freeze or alert?
- Stop anyone and everyone from accessing your credit report, unless they have your passcode.
- Typically come with fees.
- Typically last until you remove them.
- Let companies access your credit report after a credit bureau contacts you to verify your identity.
- Are free.
- Last 90 days, if you set up a basic one.
Lock it up
A credit freeze puts your credit report under virtual lock and key. Not even you can access it without a unique passcode.
“The credit freeze stops any and all access to your credit report until you have it lifted or removed,” Fuher says. “If I went to buy a new car, I would have to contact the credit bureau myself, verify who I am, have the freeze lifted, do the car loan, and then call the credit bureau again if I wanted to put the freeze back on.”
In general, a credit freeze is the best way to keep fraudsters from taking out loans in your name. On the downside, a freeze can be inconvenient when you’re trying to access your own credit, and it usually costs money to impose and lift a freeze.
To place a credit freeze, contact all three credit reporting agencies ― Experian, TransUnion, or Equifax ― online or by phone.
If the idea of a credit freeze leaves you cold, consider setting up a free fraud alert, which requires businesses to take extra steps to verify your identity before they give you new credit.
“A fraud alert is good for the majority of people who are still actively using their credit, or if they’re refinancing a loan,” Fuher says.
To set up a fraud alert, contact any one of the three credit reporting agencies, which is then required to notify the other two. Basic fraud alerts expire after 90 days.
For most people, Fuher recommends setting up a fraud alert plus doing regular personal inspections of your credit.
“You should be proactive in getting your free credit report to make sure there are no new lines of credit — nothing opened up in your name that you’re not aware of,” he says.
It’s fine to hire a credit monitoring agency, Fuher says, but you should think of those services as insurance ― not as your only line of defense.
Whatever you do, act soon, he adds: “With all of the recent data breaches, it’s not a matter of whether your personal information is out there. It’s a matter of how much is out there and who has access to it.”