Fraud Alerts

I’ve talked quite a bit about how to identify identity theft and some of the strategies you can use to protect yourself. Now I want to look at some specific services you can take advantage of—for free—in your personal fight against ID theft.

This week we’re going to take a look at fraud alerts. Fraud alerts are a free service provided by the credit bureaus. Once you request a fraud alert, a notice is placed on your credit file. When someone applies for credit using your information, the lender will see this notice and should attempt to contact you before issuing the credit.

In most cases, this situation will look something like this: You apply for an auto loan, a new store credit card, or a mortgage. The lender does a credit check to see if you qualify, notices the alert, and calls the contact number listed on your credit file. Your cell phone rings. You answer and tell the person standing in front of you, or in the back office, that yes, you’re the person standing there. But there’s always the chance you won’t be the person standing there…and that’s when you’ll be happy you have the fraud alert in place!

Advantages

Fraud alerts have two major advantages:

  1. They let lenders know you need to be contacted before issuing credit, so if someone tries using your information to get credit or a loan, you can stop them.
  2. They’re free. Free is a good!

Disadvantages

Fraud alerts also have some major disadvantages:

  1. They only work for credit-related applications. They won’t protect your existing credit card accounts. They won’t stop medical fraud. And they don’t work for all types of lending—many short-term lenders, such as payday loan providers, don’t check your credit first.
  2. Even if you have fraud alerts on your credit file, some lenders won’t contact you, because they already have their own fraud detection systems in place, and they feel confident the person applying for credit is, in fact, you. Hopefully they’re right.
  3. Fraud alerts may prevent you from getting credit. Since lenders have to contact you before issuing credit, things may get delayed or even denied if they can’t get ahold of you right away.
  4. You have to re-request them every 90 days. This is by far the biggest problem with fraud alerts. Unlike the identity protection services you pay for, fraud alerts have a set time limit on them, and the credit bureaus won’t reset them if you don’t request it again. If you decide to place fraud alerts, make yourself a calendar reminder for 90 days from now, so you’ll remember to set them again. A recurring reminder is even better.

How to Place Fraud Alerts

Placing fraud alerts on your credit file is a relatively easy process. You can place them with any of the three major credit bureaus (TransUnion, Equifax, and Experian), and they will automatically be placed with the other two as well. You can place them in one of two ways:

  1. Call the credit bureau. This can be time-consuming, but it’s fairly easy to do. I would post the best numbers to call, but the bureaus change their phone numbers all the time. Your best bet is to go to check their website for a current number, or check your most recent credit report.
  2. Place fraud alerts on a bureau’s website. Here are the current sites each bureau is using for fraud alerts. These tend to change regularly too…so if you notice one is no longer working, leave me a message in the comments section, and I’ll track down the new site.

Regardless of the method you use, you are going to need to verify your identity – this usually involves answering some questions created from information on your credit file. Things like, “Which of these lenders do you have a mortgage with?” and “Which of these addresses have you lived at?”

They are also going to ask if you have reason to believe you may be at risk of identity theft. This is probably the stupidest question ever asked – we’re all at risk. Just say yes.

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