This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.
A fraud alert gives you an extra line of defense against identity theft. Learn how it works and what to expect if you put a fraud alert on your credit.
Image source: Getty Images
New account fraud has become a popular way for scammers to steal money. Instead of using your card information, criminals use your personal information to open a whole new account, such as a credit card or loan. Then, they can get money from the new account, skip out on paying the bill, and leave you to sort out the mess.
There were 363,092 reports of new account fraud using credit cards in 2021. If you’re worried about your identity being stolen this way, a fraud alert could give you extra protection and peace of mind.
You can put a fraud alert on your credit free of charge by contacting any of the three credit bureaus: Equifax, Experian, or TransUnion. Each one lets you do this online, and you don’t need to set up a fraud alert with all three. The one you contact is required to notify the other two so they do the same. Here’s how a credit fraud alert works and what to expect afterwards.
Lenders and creditors will contact you about new credit applications
A fraud alert notifies lenders and creditors to contact you directly about credit applications in your name. When you set up a fraud alert, you provide the phone number where you want to be contacted.
Credit checks are a standard part of credit applications, including applications for credit cards and loans. When a lender checks your credit, it will see the fraud alert on your credit file and the number where it can contact you.
This means you’ll know about every credit application made using your information. If you filled out the application, you can let the lender know it’s legit, and the lender can proceed as usual. If you didn’t, you can inform the lender so there isn’t a fraudulent account opened in your name.
An initial fraud alert lasts one year
There are multiple types of fraud alerts:
An initial fraud alert is available to anyone. It lasts for one year, and you can renew it for additional one-year periods.An extended fraud alert is available to victims of identity theft. To put an extended fraud report on your credit, you must have a police report or an FTC identity theft report. It lasts for seven years.An active duty alert is available to active duty service members. It lasts one year and is renewable for the length of your deployment.
You can keep renewing a fraud alert free of charge for as long as you want. Just make note of when the fraud alert will end so you can decide if you want to renew it.
It protects you from new account fraud, but there are other types of fraud out there
A fraud alert works well against new account fraud. When you put a fraud alert on your credit, scammers won’t be able to take out credit cards or loans using your information.
Keep in mind that there are many types of fraud, and a fraud alert doesn’t provide complete protection from every possible threat. Criminals could still steal your existing credit or debit card information to make fraudulent purchases. They could also potentially open a fraudulent bank account in your name, since many bank accounts can be opened without a credit check.
Should you put a fraud alert on your credit?
Consider putting a fraud alert on your credit if you’ve been a victim of identity theft or if you’re worried about it. For example, if you learn your information was stolen in a data breach, you may want to set up a fraud alert to protect against fraudulent accounts.
If you’re not sure a fraud alert is the right choice, there are other options available. For something more convenient, you could sign up for a credit monitoring service. There are free ones available, as well as free identity theft protection offered by some credit card companies. Credit monitoring helps you stay on top of your credit and accounts opened in your name, without needing to manually approve every new account yourself.
For something more robust, there’s a credit freeze. When you freeze your credit, lenders and other third parties can’t even access your credit report, effectively preventing new credit applications in your name. It’s not the most convenient choice, but it’s another effective way of preventing new account fraud.
Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 2025
If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
