Fraud Alert vs. Credit Freeze

Identity theft continues to be a growing problem today. To keep yourself safe from cybercrime, you should look into the differences between fraud alerts and credit freezes, which are two of the most common security measures people are currently taking.

With the internet expanding at such a fast pace and many businesses moving to efficient online platforms, personal information is transferred and bought and sold at a similarly alarming rate, often without your knowledge. While most of this is legal, criminals use the same avenues as legitimate companies to obtain your information. Once they have, they can use your credit information and accounts to buy whatever they please.

If you regularly monitor your credit accounts, it should not be difficult to catch questionable charges. If you find one, you have a couple of options at your disposal for alerting the proper authorities and taking care of the charge so that you won't be responsible for paying it.

FRAUD ALERT: The Advantages

The first option you have is known as a "Fraud Alert." This is a very simple process that involves placing a "flag" on your name or social security number so that the credit agencies know you want them to take extra security measures before simply opening a new account.

Generally speaking, if you place an alert like this on your account, anyone who receives an application for credit is supposed to alert you so that you can verify the application. An initial fraud alert can last up to 90 days, but you can renew it if you want more protection. You can also apply for an extended fraud alert, which lasts for as long as seven years and is generally offered to people who have already had their identity stolen.

FRAUD ALERT: The Disadvantages

While a fraud alert is very simple and somewhat common, it does have a couple of minor setbacks. Unfortunately, credit companies are only required, by law, to take "reasonable measures" to ensure proper authorization of all credit applications. This means that they do not have to "absolutely" ensure authorization, which can still leave you open to fraud, though at a reduced risk. Also, because of the nature of the measure, it does not allow you to get instant credit, which is common at department stores that offer discounts when you open an account.

CREDIT FREEZE: The Advantages

In general, a fraud alert is very simple and usually works for most minor concerns. If you have a greater concern or simply want to be as secure as you possibly can, you can also request a "credit freeze." Basically, this prevents anyone from applying for credit in your name or with your information. Instead of notifying you that an application is awaiting authorization, you have to contact the credit bureaus yourself in order to apply for a new credit account.

CREDIT FREEZE: The Disadvantages

While a credit freeze will definitely provide more protection, it also has some hindrances. First of all, initiating a freeze costs a fair amount of money and you may also have to pay another fee to lift it. Therefore if you plan to apply for a lot of credit, a freeze may not be a good idea. Also, if you do want to lift the freeze it can take up to three business days to do so, which means you will have to plan accordingly.

Obviously, there are benefits to either of these security measures. Everyone has different needs and concerns so you will have to decide which one serves you best. You can even employ both tactics if you need to be absolutely certain of your security. In fact, if you are concerned about identity theft, you can hire a security company who can take care of all of this for you.

Identity theft continues to be a growing concern in the United States. This is why the credit bureaus make fraud alert and credit freeze options available to you as a financial customer and concerned citizen. Both provide extended security for your credit but fraud alerts are much more flexible, which has both benefits and downfalls. Similarly, a credit freeze offers stronger security, but also more rigid rules if you want to remove it.

Final Word

In the end, you need to determine which form of extended protection you need for your situation. If you aren't sure how to approach it, you may find it best to employ the services of an identity theft protection company.