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FAQ - Credit Reports

Question - What is a fraud alert?

Answer - A fraud alert is an red flag placed on your credit report to notify any potential creditors not to issue credit in your name without taking specific steps first. If you suspect that your identity has been stolen, simply make a phone call to each of the three bureaus and request that they activate a fraud alert. Fraud alerts are a free service to consumers. A fraud alert won't limit you from using already established credit, nor will it prevent your current lenders from examining your credit reports to see your credit status.

One downside of a fraud alert is it can be ignored by lenders, even though, by law, they are supposed to take specific steps to verify the person who is applying for credit in your name. Another downside is fraud alerts expire in as little as 90 days. You have the option to renew, but most people don't stay on top of the timeline. An alert can be extended up to seven years, but only if you can prove that you have been a victim of identity theft which requires a police report. Return to FAQ

Question - What is a credit freeze?

Answer -A credit freeze is much more effective in protecting your credit than a fraud alert because it completely blocks your credit report. It allows no one, not even you, to open a credit account in your name. It also denies lenders, insurers, and employers access to your file to complete background checks. However, like a fraud alert, lenders you currently have accounts with still have access to your credit report under a freeze and you can continue to use those accounts.

Lenders don't have a choice to ignore a credit freeze like they do a fraud alert. When a credit freeze is in place and a lender tries to view your reports as part of the application process, they will only get a code saying your report is frozen.

Even though a credit freeze provides more protection, there are some downsides to this option. In order to activate a credit freeze you have to send a letter via certified mail that contains several pieces of identifying information and two proofs of residence.

If you need to apply for credit, you can have the freeze lifted, but you may need to wait; up to 10 days in some cases. Different states have various time regulations to honor your request. You will also need to give the bureaus a specially issued personal identification number. This puts an end to 'instant credit'; you'll actually have to plan ahead if you want to open an account (which, for most of us, is not such a bad thing).

Another downside to credit freezes is they are not free. Each bureau charges $10 to $12 to freeze your credit, for a total cost or $30 to $36. If you are a victim of identity theft your fees could be waived. Some states also waive fees for senior citizens. Lifting and reinstating the freeze may also cost money. In several states, you'll pay $10 to each bureau for a general credit-report thaw, or $12 per bureau to thaw your report for a single lender. Fees can also be assessed for removing the freeze completely or for re-issuing a PIN if you forget it. The bureaus make credit freezes more costly and difficult to obtain compared to fraud alerts because freezes impede the process of collecting and selling credit information about you, which means less money for them.

Unlike a fraud alert that expires after 90 days, a credit freeze remains active until you lift it, with the exception of South Dakota where a credit freeze will expire in seven years.

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