Consumer Reports: Fraud alert vs. credit freeze

Consumer Reports: Fraud alert vs. credit freeze

On the heels of the Equifax data breach, the CEO has retired — and the company just announced plans to offer a new service, giving consumers the ability to lock and unlock access to their credit data for free — for life. Equifax has promised to roll out that new program by January 31st. But financial experts at Consumer Reports say there are two moves you should be considering today: a Fraud Alert and a Credit Freeze.

The simplest move is to put a fraud alert in place, warning prospective lenders that your information has been compromised. A fraud alert requires a lender to take reasonable, extra steps, to confirm that the person trying to open a new credit account, is in fact you. Activating a standard fraud alert is free, just contact any one of the three big credit bureaus: Equifax, Experian or TransUnion — who then pass it on to the other two. Typically, a fraud alert lasts 90 days. Which means you have to re-up every three months. But on the plus side, you’re entitled to a free credit report every time you do.

A stronger option is a credit freeze — which you need to request from each of the three major credit bureaus. It may involve a fee, but once in place, a freeze is the single, most effective way to protect against credit fraud. Most creditors need to see your credit report before they issue you new credit. But if you have a freeze on your account, they can’t pull your file — and may not extend you credit — which should stop fraudsters. The downside, is a freeze can also shut out companies you want to do business with. So, if you’re in the market for a car or a home loan or even a new cell plan, take care of it before you institute the freeze — or you may get hit with extra fees to lift the freeze and re-instate it.

If can prove you’re already a victim of I-D theft, a seven year, extended fraud alert is also available.