Fraud Alert - Learn How to Put a Flag on Your Credit File
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NOTE: A credit freeze is even a stronger option than a fraud alert. Check to see If you live in a state where a credit freeze is available. If so, you should strongly consider placing one on your credit. It tightens access to your credit data even more by allowing you to freeze all access to your credit file.
Putting a fraud
alert on you credit file is one of the first things you should do
if you suspect someone is trying to open credit accounts in your
name. It might be something you want to do, even if you don't think
identity theft is an immediate threat.
Fraud alerts are not a cure-all, however. A fraud alert can be,
and sometimes is ignored by creditors. If you suspect you're a victim
of identity theft, or have already become a victim, fraud alerts
are only a start in trying to protect your credit. You also need
to pay close attention to your credit
report to make sure no new credit inquiries or credit accounts
are being opened.
What is a
Fraud Alert?
A fraud alert is something that the major credit bureaus attach
to your credit report. When you, or someone else, tries to open
up a credit account by getting a new credit card, car loan, cell
phone, etc., the lender should contact you by phone to verify that
you really want to open a new account. If you aren't reachable by
phone, the credit account shouldn't be opened.
A creditor isn't
required by law to contact you, however, even if you have fraud
alert in place.
How Do I Set Up a Fraud Alert?
It's pretty easy. Just contact each of the fraud
department of the credit bureaus and ask them to flag your credit
file for fraud. You'll probably talk to an automated voice response
system and it should only take a few minutes. You should consider
using your cell phone as a contact number, so creditors can reach
you more easily.
NOTE: The bureaus claim to share fraud alert data once you contact one of them. However, studies have shown that this process doesn't always work so your best option is to contact each bureau individually to place an alert.
What Happens When I Activate a Fraud Alert?
- Within 24
hours, an alert should be be activated at the credit bureau. You should receive a confirmation in the mail a week or two after your call. If you don't receive this confirmation, call a place the alert again.
- Your name will be removed from all pre-approved credit and insurance offers for two years.
The fraud alert will remain in place for only 90 days. When the time runs out, you'll need to reactivate the alert or you can consider a service like Debix or Lifelock. You can also apply for a 7-year victim statement that will keep the alert in place for, you guessed it, 7 years. For this, you will have to provide proof that you've been a victim of fraud.
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What Are
the Drawbacks of a Fraud Alert?
Activating a fraud alert will cause you a problem if you're used
to walking into an electronics store, signing up for their amazing
"don't pay anything until 2010" credit offer, and walking
out of the store with a new big-screen TV. With a fraud alert active,
you have to be available at either your work phone or home phone
to approve opening the credit account. No big deal. It will just
require a short delay in your instant gratification and a call-back
to the credit company authorizing the new account.
If you can live with that, putting a fraud alert on your credit
will help protect you in some situations.
NOTE: You want to be cautious if you're just about to apply for a home loan or refinance. Let your broker know that you have a fraud alert in place because you're trying to protect yourself against fraud.
On the plus
side, a fraud alert won't cause any problems with your current credit
card, bank or credit accounts. It's focused on new credit accounts,
not the ones you already have opened.
How Can I Remove a Fraud Alert?
If you decide you want to remove a fraud alert you'll need to request
it in writing. You'll have to include your name, social security
number, current and previous addresses, date of birth, and telephone
number and send it to the fraud department
of the credit bureaus where the alert has been placed. I'd also
suggest using certified mail or overnight shipping. You want to
be able to track a letter that has all that critical data.You could also just wait the 90 days for the alert to expire.
