Change has been constant since the beginning of time. Like everything else, thievery has also evolved drastically. With great technological advancements, it has become easier to do everything, including theft. In terms of finance, any wrongful deception intended to acquire a financial advantage is known as Fraud. If you keep a track of your financial records, you can detect a fraudulent transaction in time and apply for a fraud alert to prevent further damage. But what is a fraud alert? Read on to find out everything about how a fraud alert works.
What is Identity Theft?
The act of posing as another person and utilizing someone’s identifying information to get financial privileges is known as identity theft. The person whose identity is compromised in such an act is usually harmed, especially his/her financial assets. Identity theft is of the following types-
- Identity cloning and concealment: Impersonating someone else to hide one’s own identity.
- Criminal identity theft: Criminal identifying as another individual at the point of arrest.
- Synthetic identity theft: Fabricating a person’s identity information and using it.
- Medical identity theft: Seeking medical care under the identity of another person.
- Child identity theft: Misuse of a minor’s identity.
- Financial identity theft: Gaining financial benefits in another person’s name.
Related Topic: Stolen Credit Card: What to Do if You’re a Victim?
What is a Fraud Alert?
A Fraud Alert is a means to let credit bureaus know that you think you’re at risk of identity theft and are worried someone might try to open a fraudulent credit account under your name. This means that any lender has to take some extra steps and precautions before they credit your accounts. This helps in ensuring that it is you who is requesting the account, and not a fraud element with unlawful access to your identifying information.
Any lender will thoroughly assess your credit report before approving your application for credit. That is when they notice the fraud alert. Once that happens, they take extra steps to verify your identity. This helps in stopping thieves from getting new credit in your name. Also, this reduces the chances of you ending up as a victim of identity theft.
Types of fraud alerts-
Fraud alerts are a matter of great concern as your financial security is on the line here. Hence, it is extremely important to understand the different types of fraud alerts-
The temporary alert-
This type of alert lasts for 90 days from the date it is issued. If you notice some suspicious transactions on your credit card but you are not sure that your identity has been compromised. To ensure that there are no such transactions made from your account, it is advisable to check your credit report frequently.
An extended fraud alert-
This alert lasts for 7 years. It is issued only if you can prove that your identity has been stolen. You’ll get two free credit reports in the first year from all three credit bureaus so that you can track the recovery process. On top of that, you’ll be removed from all of the prescreened offer lists for a total of five years.
How to place a fraud alert on your credit reports?
These are the steps you need to follow to place a fraud alert-
Contact a credit bureau:
You can ask for a fraud alert to be placed on your account with the three major credit bureaus — Equifax, TransUnion or Experian — by requesting the alert online or by phone.Equifax: Online or by calling 1-888-766-0008
Experian: Online or by calling 1-888-397-3742
TransUnion: Online or by calling 1-800-680-7289
You need to contact only one of the three main credit bureaus to place fraud alerts on your credit reports from all three. That bureau will then notify the other two credit bureaus of the alert. It is compulsory as per the Fair Credit Reporting Act.
Request the right action:
You need to understand your predicament carefully before you talk to the credit bureau. What’s more important is that you need to explain what you want to the bureau executive carefully. Also, you need to understand that a fraud alert only means that the lenders would take extra precautions before offering your credit. You can still request and receive credit.
Obtain a free credit report:
You can receive a copy of your credit report from each bureau after you file a temporary fraud alert. When you file an extended alert, you can get two free copies of your credit report from each credit bureau.
Remove/ Renew:
You can let the fraud alert run its course or you can request that the credit bureau remove it before it expires if you no longer need it. You need to notify each bureau on your own to take it off your report if you remove it earlier than its expiration.
Once the fraud alert expires, you can choose to either renew it you wish or you can request for an extended fraud alert for seven years. You need to create an identity theft report. Some credit reporting companies or creditors will also require a police report before filing an extended fraud alert.
Related topic: Identity Theft and Fraud Protection of Credit Cards
Will a fraud alert affect my credit scores?
Your credit score remains unaffected by placing a fraud alert. The only problem you can face by placing a fraud alert is that if you wish to receive credit there will be a delay in the process. Not because your credit score is bad but because the credit bureaus and lenders need to double check your identity at every step to ensure that it is, in fact, you who have requested the credit.
How can I protect myself against identity theft?
Since prevention is always better than cure, here are a few steps that might help you in protecting yourself from identity theft-
Protect records and statements:
Bills and receipts should be discarded once they are consumed to ensure it does not fall in the hands of someone who might misuse it.
Guard your mail:
There is a lot of information that can be extracted from a person’s mailbox. Ensure you never leave your mail open in a public system and do not share your password with people.
Safeguard your details:
Do not share your pin or other financial details with anyone. Even with people you trust or the people who might claim that they need the information to help you with something.
Keep your card in check:
Always keep your credit card in your line of sight. Do not hand over your card to someone who might not require to have it. Even if you do, ensure that they are not misusing it.
Monitor your credit report:
Keep checking your credit report frequently so that you can monitor if there are any significant changes in your spending patterns.
We hope now you have all the information you need about fraud alerts. If you still want to know something, do tell us in the comments below. Also, read our blog about Tips and Tricks To Make the Most of Your Credit Card to ensure you use your credit card wisely.
A dose of fun: Watch the movie ‘Identity Theft’ to see how a person’s identity can be misused!
