Fraud alert vs. credit freeze

On the heels of the Equifax data breach, the CEO has retired and the company announced plans to offer a new service, giving consumers the ability to lock and unlock access to their credit data for free for life. Equifax has promised to roll out that new program by January 31st. But financial experts at Consumer Reports say there are two moves you should be considering today a fraud alert and a credit freeze.

The simplest move is to put a fraud alert in place, warning prospective lenders that your information has been compromised. A fraud alert requires a lender to take reasonable, extra steps, to confirm that the person trying to open a new credit account, is in fact you. Activating a standard fraud alert is free, just contact any one of the three big credit bureaus: Equifax, Experian or TransUnion –– who 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. But on the plus side, you’re entitled to a free credit report every time you do.

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 shutout 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 or you may get hit with extra fees to lift the freeze and re-instate it.

If can prove you’re already a victim of ID theft, a seven-year extended fraud alert is also available.

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