Credit Freeze Vs Fraud Alert
There are two things an individual can do in the unfortunate event of either becoming an identity theft victim or suspecting the possibility of becoming a victim. Putting a credit freeze and fraud alert on one’s credit report is essential for stopping fraudsters before they start. With either of these options, creditors will be made aware of the suspicious circumstances for the individual they are considering extending a line of credit to or opening an account for. Plus, a creditor will be made to contact an individual specifically in order to establish any type of credit at all.
While they sound quite beneficial, many wonder what the difference between the two options are and what situation they work best in. With a credit or security freeze, a credit file cannot be shared with a potential creditor. A fraud alert allows creditors to see a report but informs them to be wary of possible identity theft in the works. A number of identity theft programs opt to enact fraud alerts on an individual’s credit report because it lasts a total of ninety days. By renewing this option repeatedly, an individual will have to be contacted personally in order for a loan, bank account or new line of credit can be opened.
The requirements for a credit freeze can vary depending on a victim’s state of residence. While some have strict laws, others have no laws whatsoever. For example, a credit freeze can only be enacted once an individual has become an identity theft victim in the states of Washington, South Dakota, Mississppi and Arkansas. In other states, a freeze can be enacted by anyone, whether they have been a victim or not. When opting to do a credit freeze, one will need to alert all three credit bureaus. Though there is currently no fee for the service, a surcharge of ten dollars will be required for each bureau starting September of 2008.
As an added benefit for actively deployed members of the armed services, fraud alerts can be placed on a credit file by a spouse or other trusted representative. The alert will then carry for a total of one year. The individual’s name will also be removed from lists offering pre approved credit cards for a total of two years. This allows service members to stay problem free and keep their mind on their duty while overseas. Identity thieves tend to favor the actively deployed as victims and it not unheard of for service members to find their homecoming marred by financial fraudsters. Many now make it a regular habit to set this option up before leaving.
While some individuals will choose a fraud alert because it is free of charge, others will opt for a credit freeze in order to ensure no one is looking at their credit report or score without their immediate say so. On the other hand, it should be noted that a credit freeze will not stop lines of credit from being issued by creditors who do not check credit reports. This can sometimes happen when an individual has a long history that is in good standing with a particular financial institution.
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September 29th, 2008 at 2:36 am
Great post. I guess a credit freeze on your rating is a small price to pay for stopping the dirty thieves in their tracks.
Brian White