Consumer Reports: Fraud alert vs. credit freeze
In the wake of the massive data breach involving Equifax, many people are asking about steps they can take to keep their money safe.
Consumer Reports financial experts explain the differences between a fraud alert and a credit freeze.
If your personal information was compromised in the Equifax data breach, the simplest move is to put a fraud alert in place, warning prospective lenders that your information has been compromised.
Consumer Reports says a fraud alert requires a lender to take reasonable, extra steps to confirm that you are in fact the person trying to open the account.
Activating a standard fraud alert is free, just contact any one of the three big credit bureaus: Equifax, Experian or Transunion. They then pass it on to the other two.
Typically, a fraud alert lasts 90 days, which means you have to re-up every three months.
A stronger option is a credit freeze, which you need to request from each of the three major credit bureaus.
It may involve a fee, but once in place, a freeze is the single, most effective way to protect against credit fraud.
Most creditors need to see your credit report before they issue you new credit. But if you have a freeze on your account, they can’t pull your file and may not extend you credit which should stop fraudsters.
The downside, is a freeze can also shut out companies you want to do business with.
So, if you’re in the market for a car or a home loan, or even a new cell plan, take care of it before you institute the freeze of you may get hit with extra fees to life the freeze and re-instate it.